Certificate

I have the pleasure to certify that the thesis entitled The Role of Micro-credit in Socio-Economic Development of Bangladesh: A Case Study on BRAC in fulfillment of the requirements for the award of the degree of MASTER OF PHILOSOPHY(M.Phil) in

Management Discipline ,National University ,Gazipur

,has been

prepared by Mr. Md. Kamruzzaman. It is an original work and an addition to the existing field of knowledge. He has completed this thesis under my direct supervision. I certify that, I have gone through the final version of the thesis and found it satisfactory. I wish him all success in future.

Date: December ,2010

Professor Dr. M. Ataur Rahman

Department of Management Studies University of Dhaka & Supervisor of the Thesis

Declaration
I hereby declare that the thesis entitled The Role of Micro-credit in Socio-Economic Development of Bangladesh: A Case Study on BRAC prepared by me to National University, Gazipur, in

Bangladesh for the award of Master of Philosophy(M.Phil)

Management Discipline is an original work. The contents of the thesis have neither in part nor in full been submitted to any other University or institution for any academic degree or for other similar purposes.

Date: December ,2010

Md. Kamruzzaman Session: 2007 Roll No: 790059 Reg. # No. 507078 Management Discipline M.Phil Program National University, Gazipur, Bangladesh

Acknowledgement
2

All the praises, gratitude and thanks are due to almighty Allah, as without His special help and blessing, it would not be possible to complete the dissertation in time. Then acknowledge to my respected teacher and supervisor Dr. M. Ataur Rahman, Professor, Department of Management Studies, Dhaka University, for his valuable advice, encouragement, co-operation and guidance provided to me in preparing and finalizing the thesis. I must say that without his inspired cooperation, my work would not have seen the light of the day. It is really a matter of rare luck to work with such an excellent man like him. I owe a special kind of debt to my father AL-Hajj Md. Bashir Uddin Molla, who was all sources of eagerness of my study. I also put the endless owe to my mother Mrs. Momotaz Begum, who brought me in the planet and provided heavenly love in childhood. I am grateful to my respected elder brother Md. Moshiur Rahman and sister in law Tarjina Imami (Tisha) and their sweet daughters Tipti and Tithly and my immediate younger brother Md. Moniruzzaman and Sister in law Rehana Pervin (Shiuli) and their daughter Samia and my younger brother Md. Kamrul Hasan and his wife Sabina. My special gratefulness is to my Father-in-law Golam Rasul, Mother-in-law Mrs. Rebaeka Khatun and sister-in-law Redwana Karin (Rira) who also encouraged me in several times. Special thanks are due to my wife Romana Afrin (Rima) and my son Mohammad Rokonuzzaman (Romy). Without their inspiration and hurtful cooperation, it would not be possible to provide continuous efforts in conducting the research work successfully. My special gratefulness and thanks are due to Mrs. Nurun Nahar, Professor, English Department, T & T College, Motijheel, Dhaka and her daughter Rizwana Mahbub (Liana), Faculty, English Department, American International University of Bangladesh (AIUB), and Nasrin Sultana, Lecturer, English Department,Habibullah Bahar University College ,Dhaka for their affectionate encouragement and co-operative editorial supports. My special gratefulness and thanks are due to Dr. M Joinul Abedin, Professor,Department of Economics, Dr. A.N.M Jahangir Kabir,Professor and
3

Chairman ,Md. Mahbubul Kabir, Associate Professor,Management Department and Shahana Sharmin ,Assistant Professor, Rajshahi. I am highly indebted to my Principal Md. Shah Alam and Vice Principal Amir Mohammad Zakaria and teachers and Madam of T & T College, Motijheel, Dhaka who have always been a source of inspiration and encouragement. I am greatly indebted to the Management and employees of all categories of BRAC specially Sir Fazla Hasan Abed, Chairman, BRAC, Shabbir Ahmed, Director, Microfinance Department, Mr. Zaman and Salauddin Ahmed, BRAC Development Program, Md. Anwar Hossain ,Anisur Rahman for giving me the opportunity to complete my research in such a reputed organization. Also, I would like to express my heartiest gratitude to the teaching staff, faculty members and employees of Department of Management Studies, National University, Gazipur. I express my gratefulness to Md. Abdus Salam & Md.Kudrot-E-Khoda, Research Officer, American World University, USA, (Bangladesh Study Center), 27, Kakrail, Dhaka, for their heartfull cooperation in compose tasks. Librarians of Dhaka University, PKSF, BIDS, and BRAC University have helped me cordially in all time and supplied necessary books, journals, article, research papers and reports. My special gratefulness and thanks are due to Md. Toibur Rahman, Mr. Saiduzzaman, Md. Aminul Islam, Sagor, Dabasis, Bahar, Rabiul, Mahadi, Faisal, Muid, Noor Mohammad, Sha Alam, Shafiqur Rahaman Khan, Manik, Lokman Hakim, Srimoti Rina who also help me in several times. I am ever grateful to them. Md. Kamruzzaman Reg. # No. 507078 Management Discipline M.Phil Program National University, Gazipur,Bangladesh. IBA, Rajshahi University,

Dedicated to

My Respected Father Al-Hajj Md. Bashir Uddin Molla

Glossary of Term
1. 2. 3. 4. 5. 6. 7. 8. 9. 10 . 11 . 12 . 13 . 14 . 15 . 16 . 17 . 18 19 . 20 21 . 22 . 23 . 24 . 25 . 26 . 27 . 6 ADB AI AIDS ANC ARI BDT BRAC BIDS CSR EHC ELA EPI FAO GDP GS HIV IDCOL IFC IGS MDG NGO NWEP OAQPS PKSF PNC PO RCP Asian Development Bank Artificial Insemination Acquired Immune Deficiency Syndrome Antenatal Care Acute Respiratory Infection Bangladeshi Taka Bangladesh Rural Advancement Committee Bangladesh Institute of Development Studies Corporate Social Responsibility Essential Health Care Employment and Livelihood Adolescents Expanded Programme for Immunization Food and Agriculture Organization Gross Domestic Product Gram Shebok Human Immune Virus Infrastructure Development Company Limited International Finance Corporation Institute of Governance Organization Millennium Development Goal Non Government Organization North-West Microfinance Expansion Project Office of Air Quality Planning and Standards Polli Kormo Songsta Foundation Post Natal Care Program Organizer Rural Credit Project

28 . 29 . 30 . 31 . 32 . 33 .

REP SCI SME SSC UNDP USD

Rural Enterprise Project Share Cap International Small and Medium Enterprise School Secondary Certificate United Nations Development Program United State Dollar

Abstract
Micro-credit was born in 1970. After the birth; it is performing the role of socioeconomic development. The income, expenditure and savings of the borrowers have been increased through micro-credit. It also makes them aware of using tube well water, sanitary latrine etc. In this way, micro-credit plays a very important role in the overall socio-economic development of Bangladesh. There are other sectors in the rural areas, infrastructure development, cottage and small industries, secondary and tertiary sectors like processing and marketing of produce etc, which play an important role in the socio-economic development in Bangladesh. This research is an attempt to evaluate the role of micro-credit program in socio economic development of Bangladesh. The case of the study is Bangladesh Rural Advancement Committee (BRAC).Both primary and secondary data have been analyzed in carrying out this research. Primary data were collected in 2009 by interviewing the borrowers of BRAC in 35 districts of Bangladesh. A structured questionnaire has been administrated to collect primary data. The sample size is 200 micro credit borrowers of BRAC. Purposive sampling method has been applied for this selection. Secondary data were collected from BRAC Bulletin. The research has been found that poverty is being decreased. Women's contributions to family income in improving their over all conditions are increasing. The borrowers are found to send their children to schools for education. Health and sanitation condition improved. All borrowers are found drinking tube-well water. Maximum borrowers can attend qualified doctor. Housing and overall changes in socio-economic conditions have been found improving.

Table of contents
Page No
Certificate Declaration Acknowledgement Dedications Glossary of Term Abstract Table of Contents List of Tables List of graphs List of figures 1 2 3 5 6 7 8 10 11 12

Chapter-01 Introduction
1.1 History of the BRAC 1.2 Mission and Vision of BRAC 1.3 Organogram of BRAC 1.4 Existing programs of BRAC 1.5 Future Functions of BRAC 1.6 BRAC at a glance 15 16 17 18 23 23

Chapter-02 Literature Review

Review of related literature 29

Chapter-03 Research Methodology

3.1 Rationale of the study 3.2 Objectives of the study 3.3 Methods of data collection 3.4 Sample Size 3.5 Sampling Design 3.6 Data Tabulation and Analysis 8 34 34 34 36 36 36

3.7 Data Presentation 3.8 Chapterization 3.9 Limitation of the study

36 37 38

Chapter-04 BRAC Microfinance Program

4.1 Introduction 4.2 Definition of Micro Credit 4.3 Definition of Socio- economic Development 4.4 Vision of BRAC Microfinance 4.5 Objectives of BRAC Microfinance 4.6 Products and Services of BRAC Microfinance 4.7 Components of BRACs Microfinance Program 4.8Approach of BRACs Micro credit 4.9 The Rural Credit Project (RCP) 4.10 Information of BRAC Microfinance program 4.11 Microfinance program at a Glance 4.12 Principles of BRAC Credit 40 40 42 44 44 44 45 49 53 54 55 55

Chapter-05 Findings and Analysis

5.1 Impact of micro-credit program of BRAC borrowers 59 5.2 Ways of making Micro-credit program effective 89 5.3 Table showing the socio-economic condition of BRAC borrowers after and

before joining

97

Chapter-06 Model Development

6.1 Definition of Model 6.2 Objectives of a model 6.3 Types of Model 6.4 Model Development Process 6.5 Family Based Credit Model: Proposed Model 100 101 101 101 102

Chapter-07 Conclusions and Recommandations

7.1 Conclusions 7.2 Recommandations 110 111

Annexure

Annex 1-References 113 Annex 2-BRAC program areas 114 Annex 3-Codes of BRAC micro credit programs 115 Annex 4-Features of BRAC credit program 116 Annex 5 Some pictures of performances of BRAC micro- credit 117
9

Annex 6-Questionnaire 124

List of Tables
SL No Table No 3.4 4.10 4.11 5.1.1 5.1.2 5.1.3 5.1.4 5.1.5 5.1.6 5.1.7 5.1.8 5.1.9 5.1.10 5.1.11 5.1.12 5.1.13 5.1.14 5.1.15 5.1.16 5.1.17 Particulars Number of respondents from the selected district Information no BRAC micro finance programme Micro finance program at a glance Educational background of BRAC borrowers Occupational patterns of BRAC borrowers Age structure of BRAC borrowers Distribution of the earning members in the family Distribution of children the family Distribution number of times taken loan of BRAC borrowers Purposes for taking the credit from BRAC Distribution the period of receiving the credit Distribution numbers of family members take credit from BRAC Distribution of borrowers taking loan from NGO'S Land ownership pattern of BRAC borrowers before and after joining BRAC Ownership of non-land assets of BRAC borrowers Distribution of level and distribution of income of borrowers before and after joining BRAC Level of monthly expenditure of BRAC borrowers Distribution of level in housing of BRAC borrowers Sources of drinking water of BRAC borrowers Toilet facilities of BRAC borrowers Page No36 54 55 59 61 62 63 64 65 67 68 70 71 72 74 75 77 78 80 81

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

10

21 22 23 24 25 26 27 28 29 30 31 32 33

5.1.18 5.1.19 5.1.20 5.1.21 5.1.22 5.1.23 5.2.1 5.2.2 5.2.3 5..2.4 5.2.5 5.2.6 6.5

Source of power of BRAC borrowers Attendance to qualified physicians of BRAC borrowers Opinion about the socio-economic conditions of BRAC borrowers Opinion of improvement of monthly income of BRAC borrowers Distribution the principal amount used for paying installment Changes of solvency Amount of credit taken by borrowers from BRAC Payment to installment Distribution the amount of weekly installment Distribution of monthly deposit of BRAC borrowers Opinion about the credit of BRAC borrowers Training of BRAC borrowers Structure of Family Based Credit Model

83 84 85 87 88 89 90 91 92 94 95 96 106

11

List of Graphs
SL No 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Graph No 4.7(a) 4.7(a) 4.7(b) 4.7(b) 4.7(c) 4.7(c) 5.1.1 5.1.2 5.1.3 5.1.4 5.1.5 5.1.6 5.1.7 5.1.8 5.1.9 5.1.10 5.1.11 5.1.12 5.1.13 5.1.14 5.1.15 5.1.16 5.1.17 5.1.18 5.1.19 5.1.20 5.1.21 5.1.22 5.1.23 5.2.1 5.2.2 5.2.3 5.2.4 5.2.5 5.2.6 Particulars Yearly DABI loan disbursement Number of borrowers DABI Yearly PROGOTI loan disbursement Number of borrowers : PROGOTI Yearly UNNOTI loan disbursement Number of borrowers: UNNOTI Educational background of BRAC borrower Occupational Pattern of BRAC Borrower Age structure of BRAC Borrower Distribution of the earning members in the family Distribution of children in the family. Distribution number of times taken loan Purposes for taking the credit from BRAC Distribution the period of receiving the credit Distribution numbers of family members take credit from BRAC Distribution of the number of NGO taken the loan Land ownership pattern of BRAC borrowers Ownership of non-land assets for BRCA borrowers Level and distribution of income of borrowers before and after joining. Level of monthly expenditure Distribution of level of status in housing of BRAC borrowers Sources of drinking water Toilet Facilities of BRAC borrowers Electricity connection in the house Attendance to qualified physician Opinion about the Socio-economic condition of respondents Opinion of respondent about improvement of monthly income Distribution the principle amount used for paying installment Changes of solvency Credit taken by BRAC respondent members Payment to installment Distribution of the amount of weekly installment BRAC Distribution of monthly deposit Opinion about the loan Training of BRAC borrowers Page No 46 46 47 47 48 49 60 61 62 63 67 66 65 69 70 71 73 74 75 77 79 80 82 83 84 86 87 88 89 90 91 93 94 95 96

List of Figures
12

SL. NO 1

Figure No Figure 1.3 Figure 4.3 Figure 6.5

Particulars Organogram of BRAC Organogram of the Rural Credit Project Component of Family Based Credit Model

2 3

Page No 17 53 105

Chapter-One
13

Introduction

14

Chapter Contents
1.1 History of the BRAC 1.2 Mission and Vision of BRAC 1.3 Organogram of BRAC 1.4 Existing Programmes of BRAC 1.5 Future Functions of BRAC 1.6 BRAC at a glance

15

Chapter-One Introduction
1.1 History of the BRAC
Bangladesh Rural Advancement Committee (BRAC) is started as almost entirely a donor-funded, small-scale relief and rehabilitation project initiated by Fazle Hasan Abed to help Bangladesh overcome the devastation and trauma resulted from the Liberation war and focused on resetting refuges returning from India in February 1972. With its innovative approach to development and with no rigid model but continuously expanding and growing through experimental learning, BRAC today provides and protects livelihoods of an estimated 110 million of the 147 million people of Bangladesh. BRAC approaches poverty alleviation and empowerment of the poor through a holistic way. This method combines microfinance under its economic development program with health, education, social development, human rights, and legal services. Various support programs provide the necessary physical and technical support for other programs to run smoothly and effectively. Such programs include the Training Division, Research and Evaluation Division, Advocacy and Human Rights Unit, Finance and Accounting, Internal Audit and Monitoring, Human Resources, Administration and Special projects, Public affairs and Communications and Publications. BRAC coverage extends to 110 million of the 147 million inhabitants of Bangladesh and 69,421 villages in the countrys 64 districts. BRAC continues to maintain a strong commitment to development at the grassroots level and stands by its belief that community partnerships and institution building go a long way in sustainable development and the spreading and transferring of knowledge to future generations. The organization has been a symbol of innovation and dynamism, ever ready to experiment with innovative ideas and has been called upon to assist a number of
16

countries in crisis including Afghanistan, Srilanka, Pakistan, Indonesia, Tanzania, Uganda, and Southern Sudan. BRAC has established itself as a pioneer in recognizing and tackling the different dimensions of poverty. Its unique, holistic approach to poverty alleviation and empowerment of the poor encompasses a range of core programmes in economic and social development, health, education and human rights and legal services. Source: BRAC Annual Report (2007)

1.2 Mission and Vision of BRAC

Vision BRAC,s vision is to create a just, enlightened, healthy and democratic world free from hunger, poverty, environmental degradation and all forms of exploitation based on age, sex and ethnicity. Mission The mission of BRAC is to work with people whose lives are dominated by extreme poverty, illiteracy, disease and other disadvantages. With a holistic approach, BRAC strives to bring about positive changes in the quality of the life of the poor people. BRAC achieve mission by: 1. Working with the poor, especially women and children; 2 Engaging in multifaceted development interventions; 3. Striving to promote positive changes in quality of life; 4. Working towards attaining socially, financially and environmentally sustainable programmes; 5. Actively promoting human rights, human dignity and gender equity; 6. Helping to shape national and global policies on poverty reduction and social progress; 7 .Fostering the development of human potentially; 8. Offering professional development opportunities to our staff; 9. Encouraging commitment to the goals and values of the organization. Source: BRAC Annual Report (2007)
17

1.3 Organogram of BRAC

18

Source: BRAC Annual Report, 2008:89, Dhaka

1.4 Existing Programmes of BRAC

1.4.1 Retail Trade Arong is one of the most unique heritage brands for retail clothing, linen, shoes, accessories and home dcor products. Set up in 1978 as a fair trade organization by BRAC, Arong plays a crucial role in promoting local crafts. It employs 65,000 artisans, of which 80 percent are women. 1.4.2 Livestock and Fisheries BRAC Dairy, initiated in 1998, was established to provide a fair price for milk to the members of BRACs village organizations who invested micro loans received from BRAC for cows. BRAC has designed a particular model for cattle development comprising of technical training, vaccination, fodder cultivation, and credit facilities to the rural poor. As a result of these activities, milk production has increased substantially in the BRAC operational areas. BRAC Dairy was set up to create a linkage to the market and to protect framers from price volatility from over-supply. BRAC Dairy collects milk from 92 collection and chilling stations located in 25 districts, including 10 located in ultra-poor areas. 1.4.3 Artificial Insemination Programme Artificial Insemination Programme was set up to create synergies with the BRAC Dairy enterprise as livestock which is considered an important tool in poverty alleviation. The BRAC Bull and Buck Station production centre at Mymensingh started producing frozen semen in 2000. It provides training and employment to 1,500 artificial inseminators who are working under the supervision of BRAC veterinary experts and provides door to door service to the farmers. The programme aims to improve the breed of livestock to increase milk production and also to increase the cattle population in Bangladesh.

19

1.4.4 BRAC Poultry BRAC Poultry is a pioneering venture in this field. Set up in 1996, it has contributed to the overall growth of the poultry industry in the country and created income-generating activities for millions of rural poor. It produces day-old chicks, runs a diagnostic lab, and provides support to poultry farmers. 1.4.5 BRAC Feed Mills BRAC Feed Mills were established in 1999 with the objective to produce quality feed for poultry. It has diversified its products to include cattle and fish feed. 1.4.6 BRAC Broiler Processing Plant BRAC Broiler Processing Plant, initiated in 2001, is the largest and the sole automated plant in Bangladesh. 1.4.7 BRAC Fisheries BRAC Fisheries, initiated in 1998, supplies fish spawn, prawn PL, fish fry, fingerling juvenile in response to the needs of commercial fish farms that have emerged due to the decline in wild stocks. BRAC operates eight prawn hatcheries, four carp hatcheries, one tilapia hatchery, one marine fish breeding centre and one cage aquaculture unit. 1.4.8 Health BRAC Salt Industries was initiated in 2004 to respond to a public health need the lack of iodized salt in the country. 1.4.9 Sanitary Napkin & Delivery Kit The Sanitary Napkin and Sterilized Delivery Kit production centre were set up in 1999 to public health need of rural women in Bangladesh. The aim is to increase hygienic behavior among women with the help of BRAC health volunteers and adolescent members.

20

1.4.10 Agriculture BRAC Cold Storage was initiated in 1980 with UNDP assistance. It operates a cold storage facility in Comilla district which has a capacity of 4,000 metric tons for shortterm storage. The unit facilitates the storage of potatoes for farmers in the mid-eastern region of the country as the area yields a good harvest of potatoes but lacks adequate storage facilities. To aid farmers financially, BRAC offers them loans equal to 40 percent of the total value of the potatoes they have stored. 1.4.11 BRAC Tea Estates BRAC Tea Estates were acquired in 2003 and established as an income-generating concern. The surplus income is diverted to the development programmes. The tea estates cover four tea gardens in the Chittagong district. 1.4.12 Sericulture BRAC played a pioneering role in the development of sericulture in the country. Its main thrust is to organize women to undertake mulberry cultivation, silkworm and seed production, reeling and spinning of silk yarn, and weaving and marketing silk. The programme is currently involved in introducing high yielding varieties of mulberry trees to areas in the north, which annually suffer from monga or seasonal famine. 1.4.13 BRAC Horticulture Horticulture: The objective of BRAC Horticulture is to produce good quality seedlings and make it available throughout the country. It also aims to increase the number of good quality trees in the country. BRAC has established 15 large horticulture nurseries spreading all over the country to produce and distribute quality seedlings and develop technology for different species. 1.4.14 BRAC Printers & Packaging Printers: The printing enterprise, initiated 1977 is a full-service, desk-top publishing facility. Eighty percent of its materials production is for BRAC's education programme

21

and office requirements. It also produces calendars, diaries, security printings and university publications. 1.4.15 Packaging The BRAC Printing Pack, established in 2005, produces around 1,500 metric tons of finished flexible packaging materials per year and provides employment to over 1011 workers. 1.4.16 Alternate Energy & Renewable Bio-Gas: The project is in its planning stage. An MOU has been signed with EBI which is a US-based alternative energy company. 1.4.17 Recycled Handmade Paper BRAC Recycled Handmade Paper project started in February 2000. This project which employees mostly female workers, synthesizes paper from materials gathered from several projects and branch offices under BRAC. They manufacture thin paper sheets, thick paper sheets, boards, art paper, jeweler boxes of different sizes, exercise books, pencil boxes, note pads, photo frames, visiting cards etc. 1.4.18 Solar The project was launched in 1998 under BRAC's Rural Enterprise Project (REP) and in 2002 went into collaboration with the Infrastructure Development Company limited (government-owned and World Bank-supported). It has paved the way to subsidies and installs solar panels in rural remote and off-grid areas. 1.4.19 Investments The stakeholders of BRAC consist mainly of millions of deprived and disenfranchised poor of Bangladesh. BRAC investments act as 'hedges' to protect these stakeholders from any future 'liquidity crunch' in the financial industry. BRAC investments are independently run organizations that are fully or partly owned by BRAC.

22

1.4.20 Financial Institutions BRAC Bank Limited, which was initiated in 2001, has institutional shareholding by BRAC, the International Finance Corporation (IFC) and Shore Cap International (SCI). As a fully commercial operation the bank focuses on small and medium enterprises, which are overlooked by commercial banks. 1.4.21 Delta-BRAC Housing Finance Corporation Limited Delta-BRAC Housing Finance Corporation Limited was founded in 1997 and it is presently the largest specialized housing finance institution in the country. It is a pioneer in financing low-cost housing and the only financial institution in Bangladesh to receive an "AAA" credit rating. BRAC owns 20.37% shareholdings in Delta-BRAC Housing Corporation. 1.4.22 BRAC Afghanistan Bank BRAC Afghanistan Bank is jointly owned by BRAC, IFC, Shore Cap International and Triodes Bank. BRAC maintains one branch and three sub-branches in Kabul. It is a full service commercial bank. Though main focus is small business, it also provides other credit and savings packages. 1.4.23 Information Technology brac Net, in partnership with gNet and Marubeni Corporation of Japan, has its mission to bring affordable internet and data connectivity to the general population of the country. BRAC has 39.7% shareholdings in bracNet. 1.4.24 Document Ltd. Document Ltd. is a leading software development house in Bangladesh. In addition to supplying the entire software needs of BRAC, the company provides commercial services in business application software development, digital archiving, and database driven interactive website development. BRAC has 80% shareholdings in Document Ltd.
23

These are the existing programmes (Still 2009) of BRAC.

1.5 Future Functions of BRAC

When the world will be free from hunger and poverty, BRACs work will be done. Until then, we will strive to find practical and scalable approaches to eradicate poverty wherever we find it. Still today one billion people in the world are suffering from poverty. Obviously it is a mammoth task BRAC has to go a long way. Even in countries which are making good progress on economic growth and many of the MDG goals, there are second generation development challenges that remain unsolved. These include: the need to provide quality education for all; to reduce maternal and neonatal mortality; to expand the frontiers of sustainable agriculture production; to adapt to climate change; and sustain and expand the gains made by the poor in a globalize economy. BRAC will be working actively and in close alliance with civil society, private sector, government and knowledge institutions to face these challenges.

1.6 BRAC at a glance (2010)

1.6.1 Development Programme Economic Development Health Education Social Development Human Rights & Legal Services Disaster Management, Environment & Climate Change 1.6.2 Governance, Management & Capacity Building Training Advocacy Research & Evaluation Human Resources Public Affairs & Communications
24

 Branding Administration & Risk Management Finance & Accounts Procurement, Estates & Management Services Publications Monitoring Internal Audit Construction & Maintenance 1.6.3 Social Enterprises Arong Ayesha Abed Foundation BRAC Dairy & Food Project BRAC Agriculture & Livestock Enterprises BRAC Printers BRAC Print Pack BRAC Solar & Biogas BRAC Tea Estates 1.6.4 Investments & Related Institutions BRAC University BRAC Bank Ltd.

bracNet Document Ltd. Delta BRAC Housing Finance Corporation Ltd.

1.6.5 Program Coverage

Population Districts Staff Distribution 110 million out of 147 million 64 out of 64 3.69% (head office) 96.31% (field)

1.6.6 Human Resources

Category Full Time volunteers Male 37,725
25

Female 9,249

Total 46,974

BEP Teachers Health workers Total

374 38,099

43,479 7,679 60,407

43,853 7,679 98,506

1.6.7 Volunteer Workforce

Health volunteers Human rights legal education volunteers Artificial insemination workers Panel lawyers Panel doctors 80,000 5,743 1,853 402 93

1.6.8 Annual Expenditure

Year 1980 1985 1990 1995 2000 2005 2009 2010
Amount (In millions USD) Donor contribution

0.78 2.3 21.25 63.73 152 259 460 495

100% 97% 68.2% 54% 21% 24% 30% 29%

1.6.9 Microfinance
Village organizations (VOs) Vo members Borrowers Cumulative disbursement Disbursement 2010 Outstanding Repayment rate Average loan size Savings of Vo members Cost per unit of money lent 303,616 8.05m 5.45m BDT 504,466m (USD 8,051.04m) BDT 73,759m (USD 1,068.97m) BDT 43,841M (USD 635.38M) 98% BDT 13,133 (USD 190.33) BDT 19,966m (USD 289.36m) 6.95%

1.6.10 Ultra Poor

26

Number of women who received asset grant Number of women who received soft loan

326,500 971,675

1.6.11 Education
Primary Schools Currently running Current students Graduates Cost per child per year Pre-primary schools Currently running Current students Cost per child per year 31,670 1.0m 4.38m USD 27

11,765 0.33m USD 27

Secondary School Teacher Training

Total teachers training Continuing Education Adolescent centers Adolescent members Community libraries 1.6.12 Health Pregnant women received ante-natal care Manoshi population coverage Malaria cases tested (BSE/RDT) Tuberculosis population coverage Tuberculosis patients treated People detected with presbyopia Reading glasses sold 1.6.13 Water, Sanitation and Hygiene Total latrine installed / repaired Total participants in cluster meetings 1.6.14 Human Right & Legal Aid Services Human Rights & Legal Education classes held Graduates Complaints resolved by ADR
27

28,653 8,600 222,654 2,305 5.02 m 17 m 185,462 88.5 m 369,763 162,399 65,818

4.1 m 60.4 m

155,699 3.6 m 80,865

Cases sent to court 1.6.15 Community Empowerment Polli Somaj formed Capacity development of local govt. members Popular theatre shows staged Human rights violation reported 1.6.16 BRAC Enterprise Total assets Gross revenue Net revenue

24,962

12,295 7,186 (female) 130,222 10,406

BDT 5,908 m (USD 85.63 m) BDT 9,233 m (USD 133.80 m) BDT 989 m (USD 14.34 m)

(Source: BRAC Annual Report 2010, P-94)

28

Chapter-Two

Literature Survey

29

Chapter-Two Literature Survey

Review of Related literature
Review of the existing literature is very important for any research work. The researcher has also reviewed various literary works done by different researcher related to the present topic. Many literary works have been completed about NGO sector but no research work was done on the issue the role of socio economic development of Bangladesh. So it will be a unique in the field of research study. The researcher reviewed some literatures. These are following: Sudy-1: The M. Phil dissertation conducted by A.K.M. Saifullah (1999) (Changing Dimension of NGO Activities in Bangladesh: A Study of BRAC) his primary objectives of the study were to conceptualize the poverty situation in Bangladesh and the achievement of poverty alleviation programs in Bangladesh so for, especially in the sector. Now-a- days, there are mounting debates that whos no more voluntary or not for profit organizations. They are now gradually working for profit. An organization which will make profit or not depends on the very nacre of the organization operation for minimizing profits than nobody has the legal or other right to make any obstacle in its way. But NGO,s in Bangladesh is trying to make profit in a way or other sacrificing their voluntary character, for which these are really created. It is a new dimension of NGO activities in Bangladesh. The study aims at adding some facts about this dimension in the concurrent debate and thereby contributes to the development of the persons who study in Bangladesh. The research work was in the BRAC approach, the mission derailed of BRAC and dimension of BRAC activities. However, researcher did not discuss the role of socio economic development of Bangladesh. Study-2: Abdul Wadud (1998) discussed in his M. Phil thesis (The Role of NGO'S in Rural Development: A Case Study on BRAC'S Rural Development Program) about concept of development, rural development, elements of rural development, past and present activities of rural development, activities of BRAC on rural development etc. But his research was limited at a village of Manikgonj district. He did not discuss the role of micro-credit in socio economic development of Bangladesh.
30

Study 3: Shanaz Arefin, (1996) in her M .Phil paper entitled "Role of NGO's in Development a Study of Poverty Alleviation Programs in Bangladesh. In this thesis the researcher did the M. Phil work. Her study's objectives are: 1. To briefly review of efforts made by the government and the NGO's towards poverty alleviation in Bangladesh and 2. To analysis the role of NGO's in poverty alleviation through various programmers in terms of their impact and beneficiaries as well as a sustainable development of the country . The researcher was selected three leading NGO's such as 1. Bangladesh Rural Advancement Committee (BRAC) 2. Proshika Manobik Unnayan Kendra (Proshika) 3. Association of Social Advancement (ASA). The research was mainly work in meaning of poverty, the emergence of NGO's in Bangladesh, poverty alleviation programs of three leading NGO's, role of NGO's in development: an analytical overview etc. she compared three leading NGO's (BRAC), Proshika, ASA. This thesis was not field work. However, researcher did not discuss the role of socio-economic development of Bangladesh. Study-4: The M. Phil dissertation conducted by Salma Mobarak (2009) "Micro-Credit: A Strategy for Empowering Women in Bangladesh." The following specific objectives were also there: 1. Assess micro-credit recipients empowerment at the family as a decision maker after involving in the micro-credit program. 2. Reveal their community or political empowerment in community and union porishod meetings. 3. Examine their economic empowerment considering ability to make small and big purchases for herself, children and family 4. Identify the family and social problems faced by them as a result of micro-credit operation. This research contents is overview on Grameen Bank and BRAC, role of micro-credit in empowering women in Bangladesh. It shows some positive impact on empowerment of women in terms of freedom of decision making movement, outside home and expending self earned money. In this study, Rajshahi district has been selected. This study has focused to assess the impact of micro-credit recipients of Grammeen Bank and BRAC in one particular rural sector of Bangladesh. So ,this study was not focused on socio-economic development of Banaladesh.

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Study-5: Catherine H. Lovell (1992) discussed in his book ("Breaking the Cycle of Poverty the BRAC Strategy") that, what is BRAC? What does BRAC do? How does BRAC do? What are the sources of finance for operating BRAC's activities of BRAC in details? But he did not evaluate rural activities of BRAC by collecting data and information from the borrower's. There is no discussion in the book about the role of micro-credit in socio-economic development of Bangladesh by BRAC. However, the foregoing review shows that there has been no research of the role of micro -credit in socio economic development of Bangladesh.

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Chapter-Three

Research Methodology

33

Research Methodology
3.1 Rationale of the Study 3.2 Objectives of the Study 3.3 Methods of Data Collection 3.4 Sample Size 3.5 Sampling Design 3.6 Data Tabulation and Analysis 3.7 Data Presentation 3.8 Chapterization 3.9 Limitation of the Study 3.8 3.8 Chapterization

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Chapter-Three Research Methodology

3.1 Rationale of the Study
The beauty of Bangladesh is boundless but its economy is yet to reach a considerable state. Most of the people in Bangladesh are in dire need of money and need to be provided with more avenues to earn capital, and that is one way to let. Bangladesh prospers in socioeconomic field with the private and government enterprises. Many non-governmental organizations such as Grameen Bank, ASA, BRAC, SETU, Proshika etc emerged with the mission to facilitate the economic development of the country. Among them BRAC is one of the most prominent one. Live stock and Fisheries, Poultry, Health, Agriculture; Sericulture, Solar power etc. are some of the programs designed for the poor people of the country. Microfinance program of BRAC is contributing to the socio-economic development of the poor sections. But how BRAC is contributing the socioeconomic development needs to be researched. The present study has been undertaken for the purpose.

3.2 Objectives of the Study

The main objective of the study is to examine the current state of affairs of microcredit and its impact on the socio-economic development of Bangladesh. The present study will look into the following specific objectives:
1. To identify the impact of micro-credit program of BRAC on socio-economic

development of Bangladesh.
2. To identify the ways of making the micro-credit program more effective.

3.3 Methods of Data Collection

Data are classified facts representing the condition of the people in a state especially those facts which can be stated in numbers or in any other tabular or classified arrangement. There are many types of methods of collecting data for preparing report.
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The researcher has tried to analyze and represent his experiences about micro-credit of BRAC using both primary data and secondary data. The researcher used survey method, content analysis method and observation method.

(a) Primary data: Primary data are measurements observed and recorded as
part of an original study. When the data required for a particular study can be found neither in the internal records of the enterprise, nor in published sources, it may become necessary to collect original data, i.e., necessary first hand investigation. Primary data are prime source of any study. That is why, the researcher
resorted this source of data.

The researcher has collected primary data from the following sources: 1. Through structured questionnaire 2. Informal discussion 3. BRAC Official Records
(a) Secondary data:

When an investigator uses the data which has already been collected by others, such data are called secondary data. Secondary data can be obtained from journals, reports, government publications, publications of research organizations, trade and professional bodies, etc. (Gupta&Gupta, 2010) For collecting data from the secondary sources for this study, the following materials were consulted: 1. BRAC Bulletin 2. BRAC Annual Report 3. The Reading Materials 4. Books 5. Journals 6. Different studies conducted on the same area 7. Wording.com 8. www.wikipedia.com 9. www.businessedictionary.com 10. www.brac.net

3.4 Sample size

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The researcher selected 35 districts for getting response of 200 respondents. All is under the category of BRAC borrowers. The nature and characteristics of BRAC borrowers are same. So, the researcher selected 200 borrowers from 35 districts of Bangladesh.
Table-3.4: Number of respondents from the selected district SL. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. District Barishal Barguna Bogra Comilla Chandpur Chuadanga Chapinababgonj Dhaka Dinajpur Faridpur Gazipur Jenaidha Jhalokhati Jamalpur Jessore Kushtia Khulna Kishorgonj No. of respondent 5 5 5 5 5 5 5 20 5 5 5 5 5 5 5 20 5 5 SL. No. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. District Kuregram Lalmonirhat Mymensingh Manikgonj Meherpur Munshigonj Norail Natore Narshingdi Patuakhali Pabna Rangpur Rajsahi Shathkhira Sylhet Shariathpur Vola Total 3.5 Sampling Design No. of respondent 5 5 5 5 5 5 5 5 5 5 6 4 5 5 5 5 5 200

The study has been conducted by using purposive sampling method. Literate and knowledgeable people have been selected for the study. If the researcher would select illiterate people they could not understand the question and the respondent could not reply the answers to these questions. From purposive sampling, the researcher could collect relevant data and information according to the objectives set. So, the researcher selected purposive sampling.

3.6 Data tabulation and analysis

For analyzing data and preparing the dissertation MS Word, Graphics, MS Excel etc were been used. Data were analyzed by using appropriate statistical tools.

3.7 Data presentation

For presenting the collected data in table, graph, pie-chart, bar diagram and histogram form did all the analysis and then percentiles were used. For data processing and to create the tables from the MS Excel used. Also MS Word used to generate the report.
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For presenting data table, graphs, pie-charts, bar diagram and histogram analysis have been used.
3.8 Chapterization

The dissertation is divided into seven chapters. The summary of the chapters is given below: Chapter1: Introduction This chapter will give an understanding of the background of the BRAC history, mission and vision existing programs and future functions.
Chapter 2: Literature of survey

Second chapter of this paper is titled as literature of survey .It will describe some literature study.

Chapter 3: Research Methodology

The third chapter will focus the research methodology of this dissertation. It will be desirable the rational, and objectives of the study, method of data collection, sampling size, sampling design, data tabulation and analysis, data presentation, chapterization and limitation of the study.

Chapter 4: BRAC Microfinance Program

The following chapter (four chapter) describes the about BRAC microfinance program. It will desirable the definition of micro-credit, vision and objectives of BRAC microfinance, products and services of BRAC microfinance components of BRAC's microfinance, program, approach of BRAC'S micro credit, the rural credit project and principles of BRAC credit etc. Chapter 5: Findings and analysis Following chapter is a very important chapter which is article as findings and analysis. This chapter contains the important thing provided by the respondents. Chapter 6: Model development: Chapter six of this study is tilled as model development. It will describe the proposed model of micro -credit program for BRAC.

Chapter 7: Conclusions and Recommendations:

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The final chapter of this study gives the conclusions of this study. Then it provides a number of recommendations based on the findings and analysis for BRAC. 3.9 Limitations of the study The research is constrained with some limitations. Some of these limitations:
1. Very few researchers have conducted about micro-credit program of BRAC.

Therefore, the researcher could not make a comparative study.

2. There are many branches of BRAC all over Bangladesh. All branches cannot be

taken into consideration in this research. 3. Lack of reading materials.

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Chapter-Four

BRAC Microfinance Program

Chapter Contents
4.1 Introduction 4.2 Definition of Micro Credit 4.3 Vision of BRAC Microfinance 4.4 Objectives of BRAC Microfinance 4.5 Products and Services of BRAC Microfinance 4.6 Components of BRACs Microfinance Programme 4.7 Approach of BRACs Micro credit 4.8 The Rural Credit Project (RCP) 4.9 Information of BRAC Micro finance program 4.10 Microfinance programme 40 a Glance at 4.11 Principles of BRAC Credit

Chapter-Four BRAC Microfinance Program

4.1 Introduction
Microfinance is a powerful tool that the poor can use to find their way out of poverty by taking advantage of new opportunities and better management of risks and vulnerabilities. Designed well, it can also pay for itself and reach millions. The social intermediation embedded in microfinance in the form of group functions can build social capital among the poor which, combined with, financial capital has the potential to be a powerful mix in the fight against poverty. The formation of such social capital through the process of microfinance provision can also be used as an entry point to challenging other structures that reproduce poverty possibilities that defines BRAC. There are two different microfinance products: Micro-loans (group-based, exclusively for women), and Micro-enterprise loans (individual loans for both men and women) under six different programs which are DABI, UNNOTI, PROGOTI and CFPR. Groupbased small loans are particularly designed for OTUP, WEDP the lower-end poor to assist them to undertake income-generating activities. Micro-enterprise loans are available for small entrepreneurs to offer scope for expanding their businesses and capital base. The BRAC microfinance program is operating along with other development interventions like health and education with support program like agriculture, poultry and livestock; monitoring, research and evaluation. This integrated approach directly affects the general well-being of the microfinance members and their families. Social awareness, moral boosting, improved health conditions and better sanitation have proved to have a positive impact on the repayment behavior of the borrowers.

4.2 Definition of Micro Credit

The word credit comes from the Latin word credo meaning, I believe; it is a lenders trust in a persons/firms and intention to repay. In other words credit is the ability to command the goods or services of another in return for a promise to pay such goods or services in at some specified time in the future.
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According to Micro Credit Summit Micro Credit is a program that extends small loans to very poor people for self-employment projects that generate income allowing them to care for themselves and their families. According to Columbia Encyclopedia Micro-credit the extension to poor individuals of small loans to be used for income-generating activities that will improve the borrowers' living standards. The loans, which may be as little as $20 for very poor borrowers in some developing countries, typically are for a short term (a year or less) are not secured by collateral and require repayment in weekly installments. The borrowers, most of whom usually are women, would not qualify for a conventional bank loan. According to Wikipedia Micro credit is the extension of very small loans (micro loans) to those in poverty designed to spur entrepreneurship. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit. Micro- credit is a part of microfinance, which is the provision of a wider range of financial services to the very poor. According to Business Dictionary A small financial loan made to poverty-stricken individuals seeking to start their own business. This type of loan typically does not exceed a couple hundred dollars, so an impoverished individual can not solely depend on this type of loan to fund their business. Characteristics in Micro Credit of definition 1. Size: Loans are micro or very small in size. 2. Target users: Micro entrepreneurs and low-income households. 3. Utilization: The use of funds for income generation and enterprise development but also for community use (health/education) etc. 4. Terms and conditions: Most terms and conditions for micro credit loans are flexible and easy to understand and suited to the local conditions of the community.

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5. Mission: Its mission is to help the poor families to help themselves to overcome poverty. 6. Methodology: In order to obtain loans a borrower must join a group of borrowers and make payments in weekly. Compulsory and voluntary savings products are offered wherever possible. 7. No Collateral is needed 8. Low interest rate 9. Easy process of disbursements 10. Less paper work 11. Credit for pursuing in come generating activities 12. Small size savings In conclusion, the micro credit that is given to the people of low-income group and to the small entrepreneur in order to develop human resources and socio-economic condition is called micro credit. It can be said that Micro Credit Program may be called Socio-economic development loan. 4.3 Definition of Socio-Economic Development Socio-economic Socio-economics is the study of the social and economic impacts of any product or service offering, market intervention or other activity on an economy as a whole and on the companies, organization and individuals who are its main economic actors. These effects can usually be measured in economic and statistical terms, such as growth in the size of the economy, the number of jobs created (or destroyed), or levels of home ownership or Internet penetration; and in measurable social terms such as life expectancy or levels of education. The combination of economic and social factors that influence how an intervention is likely to change a society will be unique to each situation, but generally may include, for example:

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 Prevailing economic conditions The level of economic development and the extent of disparities within a society Political stability and the relationship between government and judiciary Levels of education, literacy and familiarity with technology Maturity and openness of markets Propensity for entrepreneurial activity Strength of tradition in terms of beliefs and behaviors Examples of causes of socio-economic impacts include new technologies (such as cars or mobile phones), changes in laws (such as the legal right to abortion), changes in the physical environment (such as increasing crowding within cities), and ecological changes (such as prolonged drought or declining fish stocks). These may affect patterns of consumption, the distribution of incomes and wealth, the way in which people behave (both in terms of purchase decisions and the way in which they choose to spend their time), and the overall quality of life. These can further have indirect effects on social attitudes and norms. In specific cases, socio-economics studies will necessitate identifying the specific relevant factors, and understanding their status before and then as a consequence of the intervention. The goal of socioeconomic study is generally to bring about socio-economic development, usually in terms of improvements in metrics such as GDP, life expectancy, literacy, levels of employment etc. Although harder to measure, changes in less tangible soft factors should also be considered. These include issues such as personal dignity, freedom of association, personal safety and freedom from fear of physical harm, and the extent of participation in civil society. Socio-economics is itself not an economic theory (though it may use economic theories to understand impacts); neither should it be confused with socialist economics. . (Source: wording.com) Socio-economic Development Socio-economic development is the process of social and economic development in a society. Socio-economic development is measured with indicators, such as GDP, life expectancy, literacy and levels of employment. Changes in less-tangible factors are also considered, such as personal dignity, freedom of association, personal safety and freedom from fear of physical harm, and the extent of participation in civil society.
(Source: www.wikipedia.org)

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4.4 Vision of BRAC Microfinance

Since its inception in 1974, BRACs Microfinance program has been working with and for the disadvantaged rural population, especially women, BRAC Microfinance has a very compelling vision of a society where:

The poor and the disadvantaged will be able to achieve sustainable improvement in their livelihoods.

Attain a high degree of self-reliance and manage their affairs independently with dignity and freedom.

4.5 Objectives of BRAC Microfinance

The objectives of the credit programme include:
1) Building viable peoples organizations capable of bringing desired changes in

their own conditions. 2) Improving the economic and social status of the rural poor by extending credit facilities to undertake profitable income and employment generation activities. 3) Improving managerial and entrepreneurial capabilities of the poor. 4) Extricating them from the exploitative money lenders.

4.6 Products and Services of BRAC Microfinance

By recognizing the heterogeneity among poor and adapting to their diverse needs BRAC Microfinance program has differentiated financial services designed for people living at different levels of poverty. These are:

Micro Loans: Aimed at the very poor, micro loans were first introduced in 1974 and targeted exclusively at very poor landless women. Because of the economic fragility of such women, micro loans are group-based, i.e., repayment is guaranteed by the VO sponsoring a woman's application for credit. The main purpose of such loans is to assist the very poor to increase their options for self-employment or income-generation.
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Micro Enterprise Loans: These are individual loans granted to both male and female entrepreneurs. First offered in 1996, the immediate function of such loans is to enable small entrepreneurs to expand their business or capital base for operating costs. The ultimate goal is to strengthen capabilities for employment creation.

Remittance Delivery Service: The globalization of labor and the annual departure of the large numbers of Bangladeshi workers for overseas employment create a need for another kind of financial service: the safe transfer of remittances to hard-to-reach areas. Migrant workers whose families live in isolated rural areas where there are no banking facilities most acutely feel the need. In partnership with BRAC Bank, BRAC Microfinance Programme initiated its remittance program in 2003.The new service processed a total of 1,183,404 transactions. Covering BDT 34,430 million (USD 504.5 mill.), between 2003 and 2008.

(Source: BRAC Microfinance Program (2008)

4.7 Components of BRACs Microfinance Programme (A). DABI

The goal of DABI (short for Daridro Bimochon, which means poverty alleviation) is to cater to the moderate poor in both rural areas and urban slums. This program organizes landless groups and provides them with financial services and self-employment opportunities. DABI provides different schemes of financial services including collateral-free loans and savings facilities to low income earners so that they can begin their own income generating businesses. Key features of DABI Loan range TK. 5,000 to TK. 30,000

Service charge: 12.5%

Repayment period: 1 year

Repayment mechanism: Equal weekly installments Loan products: General, day-to-day retail selling Weekly personal deposit Security deposit: 5% of loan amount Death benefit: Tk.5,000
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Figure: Yearly DABI loan disbursement

Figure: Number of Borrowers of DABI

(B). PROGOTI
The PROGOTI /MELA program (meaning progress) was launched in 1996 in order to generate income and create new employment opportunities through enterprise development in the rural and semi-urban areas of Bangladesh. The target of the program is to provide credit facilities and technical assistance to new and existing small businesses and BRAC microfinance graduates whose access to formal financial institutions is limited in rural and semi-urban areas of Bangladesh.
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Key Features of PROGOTI / MELA loans

Loan range: TK. 50,000 to TK. 3,00,000 (US $460 - US $4,600) Service charge: 12.5 %, Repayment: Equal monthly installments Loan products: 12 months, 18 months Collateral needed: Mortgage and title deeds

Figure: Yearly PROGOTI loan disbursement

Figure: Number of Borrowers of PROGOTI

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(C). UNNOTI
Considering the existing situation of the farmers, where lack of capital results in unsatisfactory outcome level, BRAC has taken initiatives for agro-based production enterprises which in turn benefit small and marginal farmers. This initiative is known as UNNOTI (meaning development). The goal of UNNOTI is to provide financial services to meet specific needs of small and marginal farmers. Key Features of UNNOTI

Loan range: Tk.10,000 toTk.50,000 Service charge: 12.5%

Repayment period: 1 year Repayment mechanism: Equal weekly installments

Loan products: Agriculture and small enterprise development

Figure: Yearly UNNOTI loan disbursement

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Figure: Number of Borrowers of UNNOTI

4.8 Approach of BRACs Micro-credit

(a) Beneficiaries and formation of Village Organization 1. Criteria of Beneficiary An adult person belonging to a family which owns maximum 0.50 acre of land and depending mainly on manual labor is eligible to be a member of village organization. Preference is given to the lowest strata of the poor people. 2. Formation of Village Organization The process starts with the identification of target population through a nonformal survey. After identification target population, formation of village organization takes place through personal contacts and group discussions initiated by BRAC's program organizers. Each member is required to fill in an admission form before enrollment.40-50 eligible persons can form a Village Organization (VO). Each Village Organization (VO) is sub-divided into small groups of 5 members. There is a secretary in each group who is elected by the group members for a period of 2 years. Then a managing committee for Village Organization (VO) is formed from the secretaries of the small groups with one chairperson, one secretary and cashier.
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(b) Eligibility for membership Must be a member of the BRAC Village Organization (VO). Must not belong to any other similar organization. Aged between 18-54 years. Have regular attendance in the weekly Village Organization (VO) meetings. Regular deposits weekly savings. Must form a small group of 5 members within the Village Organization (VO). (c)Procedures Members can apply for the first loan following 8 weeks of membership in a Village Organization (VO). Loans are given for both individual and joint activities. No collateral is needed.

Minimum savings balance required: 2% of lst loan, 5% of 2nd loan, and 10% of 3rd loan 15% of 4th loan. It thus goes up to 50% with an increase of 5% for each subsequent loan.

(d) Process of BRACs Micro credit Credit need is determined in small group meeting. Loan application is filled and signed by the borrowers with recommendation of their small group leaders. This is followed by the approval from president or secretary of the Village Organization (VO). The application is examined and signed by the Program Assistant (PA). The Program Organizer (PO) examines all information in the loan application and recommends it for approval. The area Manager/Regional Manager approves loan for disbursement up to Tk.10000 (US$ 250). The Programme Organizer (PO), Accounts disburses loans to each individual after preparing the disbursement sheet, duly signed by the borrowers at his/her presence.
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 As soon as the loan is disbursed, the Programme Assistant (PA) makes the necessary entries on the loan collection sheet and the passbook. Installments are deposited through the small group leaders at the biweekly/monthly meetings. (e) Documents Required for BRACs Micro credit Loan Application An Agreement between the Borrower and BRAC Loan Disbursement Sheet Pass Book (f) Loan Limit 1st Loan 2nd Loan 3rd Loan Maximum Tk. 4,000 Maximum Tk. 6,000 Maximum Tk.10, 000

(g) Subsequent Loan If a member borrows Tk.10, 000 and repay on time, he/she is entitled to take Tk.2,000 more in every subsequent loan. BRAC also extends loan for housing, tube-well and latrine. The limits for these loans are as follows: A. Housing: Tk.3, 500, Tk.6, 000 and Tk.8, 000 depending upon the length of the membership B. Tube-well: Tk.2, 000 C. Latrine: Tk.1, 000 (h) Loan Repayment Loans are repaid in 23 equal bi-weekly installments within 52 weeks. Program Assistants who are the grass-root level workers attend bi-weekly meetings of the Village Organization (VO) and collect loan installments and deposit the same to the BRAC account on the same day.

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(i) Loan Fund BRACs loan comes from the following sources: 3. 4. 5. 6. 7. 8. 9. Grant Government PKSF BKB Member Savings Own Total : : : : : : : 40% 4% 11% 2% 21% 22% 100%

(j) Income Generating Activities BRAC categorizes the income generating activities into two: (I) Program and (ii) General. Program activities are fisheries, poultry and livestock, etc. while small trade and other existing traditional activities are general. For program activities, BRAC provides training along with credit. (K) Interest BRAC charges interest at the rate of 15 per cent (except housing loan) to its borrowers. The interest rate is 10 per cent for housing loan. The interest is calculated on flat method. (L) Preconditions for loan The following are the preconditions of deserving BRAC Loans:
I. Regular attendance in meetings. II. Regular savings by the members.

III. A group bank account

IV. Completion of the functional education course.

V. Demonstration of efficiency in collective economic or social activities. VI. Capacity to manage finances and administration by the group. VII. Ability to provide at least 10% of the scheme cost. (Source: Credit Infusion in an Integrated Development Strategy: The BRAC Approach, Principles, Process and Mechanism. (1987)

4.9 The Rural Credit Project (RCP)

In 1989, BRAC began its own bank, now operating as the Rural Credit Project. The bank is designed as a self-sustaining, self-financing entity that provides banking
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services to members of mature VOs who "graduate" to the bank. This new program represents a major step by BRAC to-ward self-financing sustainability of its long-term credit activities.
Figure-4.9

Figure 4.9 is an organogram of RCP. RCP is organized similarly to RDP, except that the field units are called branches instead of area offices, and each branch has only three POs and nine GSs.

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4.10 Information of BRAC Micro finance program

Source: Official Records

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4.11 Microfinance programme at a Glance

BRAC Microfinance Programme - Key Statistics Particulars Districts Covered Total no. of Branch Offices Village Organizations Number of Group Members Active Borrowers Members Savings (millions) Loan Outstanding (millions) Average Monthly Disbursement (millions) Loan Recovery Rate Total number of Staff
Source: BRAC Annual Report (2008)

Dec-2006 64 1,383 170,277 5.31 million 4.55 million BDT 10595 (USD 156) BDT 24,355 (USD 358) BDT 3,551 (USD 52) 99.52% 17,271

Dec-2007 64 2,867 260,785 7.37 million 6.4 million BDT 13,467 (USD 198) BDT 36,344 (USD 534) BDT 5,194 (USD 76) 99.54% 34,841

Dec-2008 64 2,700 293,016 8.09 million 6.36 million BDT 15,765 (USD 231) BDT 44,903 (USD 658) BDT 7,024 (USD 103) 99.30% 26,749

4.12 Principles of BRAC Credit

The following are some basic principles which serve as guides for providing credit:
a) Loans are granted on a self-liquidating basis, repayment of principal and

interest must derive from the use to which the loan is put. Thus, to give a loan for agricultural purposes and arrange repayment from, say, land rent income would not satisfy that condition. b) No loan is given to a borrower to buy land from another borrower who owns less than he. c) Repayment is expected and scheduled in increasingly graduated steps to correspond with the completion of the schemes gestation period and increasing income from the venture. Since people with subsistence income have competing demands their income, loan repayment must follow
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immediately on receipt of the income. The longer a loan is outstanding the more difficult it is to get repayment. d) There is a minimum requirement for security. Land mortgage security is virtually useless since titles are often defective and such mortgage has never been enforced, in case of default. Moreover, the target people of BRAC have virtually nothing to give as security. Elimination of collateral raises the problem of security of the loan. Since the primary objective of BRAC is to lend to poor people who have little or no worthwhile assets to offer as collateral, BRAC aims to substitute collateral with through investigation of the borrowers ability and the proposed venture's income generating potential, prior to sanctioning of a loan. This is supplemented by continuous, intensive monitoring during the entire life of the loan. In other words, the credit worthiness of the borrower does not depend on his existing wealth, but on his ability to use a loan to produce a return on investment higher than the original investment, and his intentions regarding repayment. Both of these require a thorough knowledge of the borrower on the part of the BRAC worker. He must also have a working knowledge of the production techniques, economics and profitability (including marketing prospects) of income generating activities in the area covered by him. The very satisfactory results of following this principle in BRAC lending are the testimony of its validity. Needless to say, collateral is not foregone where available. Where loan is given for purpose of an income producing assets, the asset remains hypothecated until the loan is completely repaid. e) Subsistence people are invariably forced to sell their surplus output right after the harvest when prices are depressed. In already established branches, RDP has been providing warehousing facilities so that borrowers may store their immediate surplus and obtain a loan against it to meet their obligations. They can then sell it when the price is more favorable. This facility strengthens the borrowers holding capacity to a great extent.

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f) Loans are given for rural economic activities which have a strong development component. Loans are given preferably for activities where the return is higher than the return the borrowers have received from similar activities in the past. Thus the poor who have been growing the traditional varieties of rice will have a much better likelihood of getting a BRAC loan if they switch over TO the HYV. Implicit in this policy is the availability of all the inputs and immediate profit potential of the scheme.

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Chapter-Five

Findings and Analysis

Chapter Contents
5.1 Impact of Microcredit program of BRAC borrowers 5.2 Ways of Making Micro-credit program more effective 5.3 Table showing the Socio-economic condition of BRAC borrowers before and after joining
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Chapter-Five Findings and Analysis

The researcher collected data from the BRAC borrowers. The respondents gave their opinion to the researcher about the previous and present socio-economic conditions. There are some changes in previous and present socio -economic conditions. However findings from the study are discussed in the following paragraphs:

5.1 Impact on microcredit program

Micro-credit program is like light house in the socioeconomic development .Micro -credit in socio- economic development of Bangladesh represents that it can respond to the changing and varied needs of the poor. BRAC microcredit borrowers personal information, income, expenditure, housing condition, use of safe water, use of sanitary latrine, ability to receive treatment from qualified doctors, above all to know the impact of socio- economic development after taking the micro-credit are discussed below: 5.1.1 Educational Background of BRAC borrowers Illiteracy is a curse and education is the backbone of a nation. For this reason the light of education is a must for the society. Education is very important for proper use of credit. However, educational backgrounds of BRAC borrowers are discussed below: Table: 5.1.1 Educational level Education level Illiterate Can sign only Class I-V Class VI-SSC Class HSC-above Total 120 Source: Field Survey, 2009
100 80 60 40 22.5 20 0 Percent (%) 6 20 50

No. of respondents 12 45 100 40 3 200

100

Percentage (%) 6 22.5 50 20 1.5 100

Illiterate Can sign Only Class I-V Class VI-SSC Class HSC-Above Total

59

1.5

Figure: 5.1.1 Level of Education From the above table and graph, it shows that BRAC provide loans to the needy people irrespective of education level. Most of the borrowers are of class I-V educational level l00 (50%). The borrowers who are under class VI-S.S.C level got a substantial amount of loans from the BRAC .The authority sanctions loans to the educated persons also who can utilize the funds more properly and effectively .The borrowers who completed S.S.C level did not show that much interest or BRAC did not show support for getting loans as glanced in the above table .The reason might be that, they had the opportunity to get higher education and better employment. 5.1. 2 Occupational patterns of BRAC borrowers There are various types of occupation of BRAC borrowers. These are house making, agriculturist, day laborer, cottage industry worker and businessman. Occupational pattern of BRAC borrowers are given below:

Table 5.1.2: Occupational pattern

60

Occupation House wife Farmer Day labor Cottage industry worker Business men Others Total Source: Filed survey, 2009

No. of respondent 170 8 1 3 13 5 200

Percent (%) 85 4 .5 1.5 6.5 2.5 100

100 90 80 70 60 50 40 30 20 10 0 4 0.5 1.5 6.5 2.5 85

100

Domestic work Agriculturist Day labor Cottage industry worker Business men Others Total

Percent (%)

Figure 5.1.2: Principal occupations at the time of loan application The table and graph 5.1.2 shows the occupational pattern of BRAC borrowers at the time of survey. Majority of the borrowers was house wives, 170(85%) persons. This 85 percent of the borrowers were underemployed at the time of taking loan. The next occupations are business13 (6.5%) persons, farmer (4%) persons, Day laborer, 1(.5%) person, cottage industry 3(1.5%) persons and other 5 (2.5%) person. From the same table, it was seen that, the tendency of taking credit is more in case of house wives .Because housewives invest the money in small cottage industry and other business purposes. So, the borrowers of BRAC are now they directly involved in some income generating activities.

61

5.1.3 Age structure of BRAC borrowers Age is a very important factor in the field of credit. The young person is energetic, innovative and the old person is experienced. Different ages borrowers took credit from BRAC. Such as: Table 5.1.3: Age based person Age No. of respondent Percent (%) 15-24 18 9 25-34 98 49 35-44 60 30 45-54 21 10.5 55-Above 3 1.5 Total 200 100 Source: Field survey, 2009
Percent (%)

9 49 100 1.5 10.5 30

15-24 25-34 35-44 45-54 55-Above Total

Figure 5.1.3: Age distribution The table and graph 5.1.3 shows that, 98 (49%) borrowers were age group of 25-34 and 60(30%) persons of loan borrowers were age group of 35-44 and 21(10.5%) of loan borrowers were age group of 45-54 and 18(9 %) persons were age group of 1524, only 3(1.5%) persons were age group of 55-above. Because this group are young,

62

more energetic and innovative than other groups. In this age group people work hard to earn money. 5.1.4 Distribution of the earning members in the family If the number of income earner is more in a family, that family needs no loan. But if the income earners are less in a family, more loan is needed in that family .So it is obvious that, the number of income earners produces an intense effect in taking loan. However, distributions of households income earners are given below: Table: 5.1.4: Distribution of the earning members in the family Earning people 1 person 2 persons 3 persons 4 persons Above 4 persons Total Source: Field Survey, 2009 No. of respondent 113 61 20 3 3 200 Percentage (%) 56.5 30.5 10 1.5 1.5 100

100 90 80 70 60 50 40 30 20 10 0 30.5 10 1.5 1.5 Percentage (%) 56.5

100

1 person 2 persons 3 persons 4 persons Abov 4 persons e T otal

Figure 5.1.4: Distribution of the number of earning members The table 5.1.4 shows the distribution of number of earning members in the family 113(56.5%) respondents have one earning member in the family, 61(30.5%) respondents have 2 earning members in the family, 20(10%) respondents have 3 earning members in the family, 3(1.5%) respondents have 4 earning members in the family and 3(1.5%) respondents have more than 4 earning members in the family.

63

From the same table, it was found that, the family which had one earning people took more credit than the family which had more than one earning people. Because if a family depends on one people to earn money had to work hard to run the family successfully. But if two or more people earn money for the family then responsibilities go to more people. 5.1.5 Distribution of children in the family of BRAC borrowers If the number of children less in a family ,that family needs no loan .But the more children in a family , the more loan is needed in that family. So it is obvious that the number of children produces an intense effect in taking loan. However the distribution of children in the family is presented given below: Table: 5.1.5 Distribution of children in the family Number of children No children 1-3 4-6 Above-6 Total Source: Field Survey, 2009 No. of respondent 142 56 2 200 Percentage (%) 71 28 1 100

120 100 80 60 40 20 1 0 Percentage (%) 28 71 100

No children 3-Jan Above-6 Total

64

Figure 5.1.5: Distribution of children in the family The table and graph 5.1.5 shows that, 142(71%) borrowers have no children in their family, 56(28%) borrowers have 1-3 children in their family and 2(1 %) borrowers have 6 or more childrens in their family. From the same table it was found that most of the borrowers 142(71%) had no children .Because the age group of borrowers 15-24 and 25-34 took more credit than other age group and maximum borrowers are bachelor. 5.1.6 Distribution of number of times taken loan of BRAC borrowers The distributions of the number of times taken loan from BRAC by borrowers are of four categories .The chart is given below: Table 5.1.6 Distribution number of times taken loan Times taken loan 1-4 5-9 10-14 15-above Total Source: Field Survey, 2009
120 100 80 60 40 20 0 Percent (%) 1to 4 5 to 9 10 to 14 15-above Total

No. of respondent 148 32 15 5 200

Percent (%) 74 16 7.5 2.5 100

65

Figure 5.1.6: Opinion of number of times taken loan In the table and graph 5.1.6 shows that 148(74%) borrowers took the loan 1-4 times and 32(16%) took loan 5-9 times and 15(7.%) borrowers obtained loan 10-14 times and only 5(2.5%) borrowers took the loan 15-above times. There are some borrowers who have taken credit from BRAC, growth and development, occurred tremendously, have achieved qualification to receive loan from Bank or SME sectors, have not taken loan from BRAC, have taken loan from bank or other sectors. But some borrowers have taken loan several times from BRAC. 5.1.7: Purposes for taking the credit from BRAC The borrowers took the loan for various purposes. These purposes were maintaining the family and building the house, business and purchasing rickshaw and sewing machine. The purpose for taking the credit from BRAC is given below:

Table 5.1.6: Purposes for taking the credit Purposes for taking the credit Family maintaining Business Purchasing rickshaw, Sewing machine Poultry firm Purchasing land To build house No. of respondent 29 112 12 19 8 3
66

Percentage (%) 14.5 56 6 9.5 4 1.5

Others Total Source: Field Survey, 2009

100 90 80 70 60 50 40 30 20 10 0 14.5 6 9.5 8.5 56

17 200

8.5 100

100

Family maintaining Business Purchasing rickshaw, Sewing machine Poultry firm Purchasing land To build house

4 1.5

Others Total

Percentage (%)

Figure: 5.1.7: Distribution of taking the credit from BRAC Purposes of taking the credit from BRAC are presented in table 5.1.7. The table shows that, 29(14.5%) borrowers took the credit for family maintaining, 112(56 %) borrowers took the credit for business, 12(6%) borrowers took the credit for purchasing rickshaw, sewing machine, 19(9.5%) borrowers took the credit for poultry firm, 8(4%) borrowers took the credit for purchasing land, 3(1.5%) borrowers took the credit for building houses and 17(8.5 %) borrowers took the credit for other purposes. 5.1.8. Distribution of the period of receiving the credit The table 5.1.8 presents the distributions of the period of receiving the credit are given below: Table 5.1.8: Level of the period of receiving the credit Period 1 year No. of respondent 34
67

Percentage (%) 17

2 years 3 years 4 years Above 5 years Total Source: Field Survey, 2009

68 30 18 50 200

34 15 9 25 100

120 100 80 60 40 20 0 Percentage (%) 17 34 25 15 9 100 1 year 2 years 3 years 4 years Above 5 years Total

68

Figure 5.1.8: Distribution of the year of receiving credit The above table and graph shows that, 34(17%) borrowers took the credit for 1 year, 68 (34%) borrowers took the credit for 2 years, 30(15%) borrowers took the credit for 3 years, 18(9%) borrowers took the credit for 4 years and 50(25%) borrowers took the credit for above 5 years. 5.1.9. Distribution of numbers of family members taken credit from BRAC There are many families where more than one member took the credit. However, distributions of family members taken credit from BRAC are given below:

Table5.1.9: Level of numbers of family members taken credit from BRAC Number of persons Yes No others Total No. of respondent 14 183 3 Percentage 200 (%)
100

Percentage (%) 7 91.5 1.5 100

Source: Field Survey, 2009 100 91.5 90 80 70 60 50 40 30 20 7 10 1.5 0 Yes No others

Percentage (%)

Total
69

Figure 5.1.9: Opinion of numbers of family members taken credit from BRAC The table shows that 14(7%) family members took the credit from BRAC and 283(91.5%) family members did not take the credit from BRAC. From the same table it was found that 14 respondents family members took credit from BRAC. Because family members saw that respondents income has been increased after taking credit from BRAC .So they were motivated by seeing the change among the respondents. For this reason they took credit from BRAC and tried to increase their monthly income .In some cases respondents took the credit indirectly by using the name of family member to carry out installment of BRAC. 5.1.10 Distribution of borrowers taking loan from NGOs The elaboration of NGO is Non Government Organization which plays a vital role in promoting the capabilities of the people living in poverty. This is the reason for which the people take loan from NGO. However, distribution of borrowers taking loan from various NGO, s is shown in the table: Table-5.1.10 Distribution of respondents took loan from the number of NGO NGO One Two Three Above four Total Source: Field Survey, 2009 No. of respondent 124 65 7 4 200 Percent (%) 62 32.5 3.5 2 100

70

200 180 160 140 120 100 80 60 40 20 0 7 4 65 124

200

O ne 100 62 37.5 3.5 2 P erc ent (% ) Two Three A bove Three Total

No. of res pondent

Figure 5.1.10: Level of respondents took loan from the number of NGO The table 5.1.10 shows that, 124 (62%) borrowers took the loan from one NGO and 65(37.5%) borrowers took the loan from two NGOs, 7(3.5%) borrowers took the loan from three NGOs and only 4 (2%) borrowers took the loan from 4 or above 4 NGO. From the same table, it was found that, some respondents took loan from two or more NGOs because after taking loan they had to pay specific amount of money to BRAC in every month .In some cases they need more money to invest their business which was not sufficient to meet up more demand of money the respondents took loan from two or more NGOs. 5.1.11 Impact on changes on land ownership Increase in land ownership is an important indicator of improvement in economic conditions of a poor family. However, land ownership patterns of BRAC borrowers are given below: Table-5.1.11 Land Ownership Pattern of BRAC borrowers Land Ownership Group (decimals) Before Joining BRAC After Joining BRAC Nature of Change

71

Nil Up to 10 11 to 25 26 to 50 51 to above Total

No. of respond ents 16 71 30 40 43 200

Percent (%) 8 35.5 15 20 21.5 100

No. of respondents 15 75 35 60 15 200

Percent (%) 7.5 37.5 17.5 30 7.5 100

(%)

-.5 +2 +2.5 +10 +14

Source: Field Survey, 2009

120 100 80 60 40 20 0 Percent (%) Before Joining BRAC Percent (%) After Joining BRAC 8 35.5 15 2021.5 7.5 37.5 30 7.5 100 100 Nil Up to 10 11 to 25 26 to 50 51 to above Total

17.5

Table-5.1.11 Land ownership pattern The 5.1.11 shows the land ownership pattern of BRAC borrowers. It is observed that there was significant improvement in the land ownership pattern of the BRAC members after joining BRAC, 15(7.5%) borrowers were landless after joining BRAC as against 16(8%) borrowers before joining BRAC and up to 10 decimals of
72

land owned by 75(37.5 %) borrowers while 71(35.5%) borrowers owned the same quality of land before joining BRAC and 60(30%) borrowers owned 11 to 25 decimals of land, while the same quality of land owned by 30 (15%) borrowers of the borrowers before joining BRAC and 60(30%) borrowers 26 to 50 decimals of land owned while 40(20%) borrowers owned the same quality of land before joining BRAC and only 15(7.5%) borrowers of sample 51 to above decimals of land owned while 43(22.5%) borrowers owned same quality of land before joining BRAC. From the above table it was found that, after taking the credit from BRAC, the respondents capability of buying land increased because borrower's used the credit in productive activities such as business, cottage industry, sewing machine, poultry etc. As a result borrowers income was increased. From increased income they deposit money each month. After a certain period the borrower's were able to purchase the land. As a result land ownership of the borrowers increased. 5.1.12 Distribution of Non-land assets of BRAC borrowers Non-land asset means capital, gold, cattle, cottage industry, shop etc. Table & graph 5.1.12 presents the ownership of non-land assets of BRAC borrowers. Table-5.1.12 Ownership of non-land assets of BRAC borrowers Value of non-land assets No. of respondent Percent (%) Up to 50,000 34 17 Tk. 50,001 to 1,00,000 60 30 Tk. 1,00,001 to 2,00,000 45 22.5 Tk. 2,00,001 to 3,00,000 26 13 Over the 3,00,000 17.5 100 35 100 Total 200 100 Up to 50000 90 Source: Field Survey, 2009 80 Tk. 50001 to 70 100000
60 50 40 30 20 10 0 17 30 22.5 13 17.5 Tk. 100001 to 200000 Tk. 200001 to 300000 Over the 300000 Total Percent (%)
73

Figure 5.1.12: Ownership of non-land assets The table 5.1.12 shows that, 34(17%) borrowers have owned up to 50,000 of Nonland assets and 60(30%) borrowers have owned Tk. 50,000 to 1,00,000 and 45(22.5%) borrowers have owned Tk. 1,00,001 to 2,00,000 and 26(13%) borrowers have owned Tk. 2,00,000 to Tk. 3,00,000 and 35(17.5%) borrowers have owned over Tk. 3,00,000. 5.1.13 Impact on household income The major objective of micro-credit is to create income among borrowers. Taking loan from BRAC, the poor people have increased their income and become selfemployed .However ,distribution of level and distribution of income of borrowers before and joining BRAC: Table-5.1.13 Opinion of respondents about improvement of monthly income Before Joining BRAC After Joining BRAC Nature of Change No. of Percent No. of Percent (%) respondent (%) respondent (%) Upto Tk.5,000 150 75 60 30 -35 Tk. 250 6,000-1,000 45 22.5 120 60 +37.5 Tk. 10,001-15,000 200 3 1.5 8 4 +2.5 200 Tk. 200 15,000-Above 2 1 12 6 +5 Upto Tk.5000 Total 200 100 200 100 150 Tk. 6000-1000 Source: Field Survey, 2009 150 120 Tk. 10001-15000 100 100 100 75 Tk. 15000-Above 60 60 45 Total 30 50 22.5 8 12 32 46 1.51 0 No. of Percent (% ) No. of Percent (% ) 74 respondent respondent Size of per capita income

Before Joining BRAC

After Joining BRAC

Figure 5.1.13: Distribution of income of respondents The table 5.1.13 shows that, households with per capita income less than up to Tk. 5,000 per annum were about 150(75%) number of borrowers before joining BRAC while the proportion has come down to about 60(30%) number of borrowers after joining BRAC the proportion of households with per capita income Tk. 6,000 to Tk. 10,000, 45(22.5 %) number of borrowers before joining BRAC. While after joining BRAC, it has been increased from 22.5 percent to 60 percent i.e. 120 number of borrowers in sample borrowers. The proportion of households with per capita income in the 10,001-15,000 was about 3 (1.5%) numbers of borrowers before joining BRAC. While at the time of survey, the proportion increased 8(4%) number of borrowers on the other hand only 2(1%) borrowers with per capital income above Tk. 15,000 per annum were about 2 (1 %) people before joining BRAC. While at the time of survey the proportion has increased 12(6%) percent number of borrower. From the above table and graph it was shown that, microcredit programs of the BRAC the borrowers are engaging themselves in the income generating and self employment works. So the monthly income of borrowers increased after taking credit from BRAC. Because the borrowers utilized the credit properly in different sectors such as business ,small and cottage industry, poultry firming ,buying of sewing machine ,rickshaw ,van etc. So microcredit has a positive impact on savings.

75

5.1.14 Impact on expenditure The table 5.1.14 presents the level of monthly expenditure of BRAC borrowers. It is given below: Table-5.1.14 Level of monthly expenditure of BRAC borrowers Level Before joining After joining BRAC BRAC Frequency Percent Frequency Percent (%) (%) 142 71 97 48.5 55 27.5 85 42.5 15 7.5 3 1.5 1 .5 2 1 200 100 200 100
100 Series1 71 48.5 42.5 27.5 1.5 0 Percent (%) Percent (%) Before Joining BRAC After Joining BRAC 76 7.5 0.5 1 Series2 Series3 Series4 Series5 Series6

Nature of change (%)

0-5,000 6,000-10,000 11,000-15,000 16,000-20,000 21,000-25,000 26,000-above Total 120

100 80 60 40 20

-22.5 +15 +7.5 +1 +1

100 Source: Field Survey, 2009

Figure 5.1.14: Distribution of monthly expenditure The table 5.1.14 present that, 142(71%) borrowers of the households had expenditure up to Tk. 5,000 per month before joining BRAC. While after joining BRAC 97(48.5 %) borrowers had expenditure and 55(27.5%) respondents had expenditure 6,00010,000 while after joining BRAC 85(42.5%) persons had expenditure of the same level and 15(7%) persons had expenditure Tk. 16,000-20,000 after joining BRAC and only 2(1%) borrowers had expenditure above Tk. 26,000 after joining BRAC. From the same table it was found that, borrowers expenditure increased because borrowers used the credit in productive activities such as business, cottage industry, sewing machine, poultry etc. As a result borrowers income increased and ultimately the expenditure had been increased after taking the credit from BRAC. 5.1.15 Level of houses of BRAC borrowers A house is a place where a man lives. Housing is one of the basic needs of men. The distribution of the level of the status in housing of BRAC borrowers is given below: Table-5.1.15 Distribution of level of status in house Before joining After joining BRAC BRAC Borrowers Percent Borrowers Percent (%) (%) Bamboo Made 36 18 19 9.5 Soil Made 27 13.5 21 10.5 Tin Shed 120 60 115 57.5 Building 17 8.5 45 22.5 Total 200 100 200 100 Source: Field Survey, 2009
77

Status

Nature of change (%)

-8.5 +3 +2.5 +14

250 200 150 100 50 0 2 4 6 Figure 5.1.15: Impact on housing It is observed from table 5.1.15 that, 36(18%) number of borrowers had bamboo
made house before joining BRAC. While after joining BRAC, the share of bamboo made houses reduced. The share of bamboo made houses reduced to 19 (9.5%) number of borrowers from 18 percent. The share of soil made houses 27(13.5%) number of borrowers while after joining BRAC. The share of soil houses has been reduced substantially. The share of soil made houses reduced to 21(10.5%) number of borrowers from 27(13.5%) number of borrowers. The shares of tin shed house were 120(60%) number of borrowers before joining BRAC. While before joining BRAC, the share of tin shed made houses has reduced substantially. The share of tin shed made houses reduced to 57.5 percent from 60 percent. And the share of brick building houses was 17(8.5%) number of borrowers before joining BRAC. While the same increased to 45(22.5%) number of borrowers 45.

Before Joining BRAC Borrowers Before Joining BRAC Percent (% ) After Joining BRAC Borrowers After Joining BRAC Percent (% )

78

From the above table it was seen that, borrowers housing status significantly has been improved after taking the credit from BRAC .Before taking the credit from BRAC, the number of bamboo made, soil made and tin shade houses were more and number of buildings were less. But after taking the credit from BRAC the number of bamboo made, soil made and tin shade houses has been decreased. On the other hand number of building increased due to the increase of monthly income as well as tendencies of saving money. 5.1.16 Tendency on drinking water Pure drinking water is essential for health. Sources of drinking water of BRAC borrowers are different categories such as tube-well, pond, river and well. Sources of drinking water of BRAC borrowers are given below: Table-5.1.16 Sources of Drinking Water of BRAC borrowers No. of respondent Before joining BRAC Percent (%) 93.5 3.5 1.5 1.5 100 After joining BRAC Percent (%) 97.5 2 .5 100 Nature of change (%) +4 -1.5 -1.5 -1

Tube well Pond River Well Total

Source: Field Survey, 2009

120 100 80 60 40 20 0 Percent (%) Before Joining BRAC Percent (%) After Joining BRAC 3.5 1.5 1.5 2 0.5 93.5 100 97.5 100 Tube well Pond River Well Total

79

Figure 5.1.16: Sources of Drinking Water

The table and graph 5.1.16 shows that, 187(93.5%) number of borrowers had access to tube well drinking water before joining BRAC. While after joining BRAC the percentage of using safe drinking water has been increased to 195(97.5 %) borrowers after joining BRAC against 93.5 percent, 7(3.5%) number of borrowers of using pond drinking water. While after joining BRAC the percentage of using pond drinking water decreased to 2 percent from 3.5 percent ,3(1.5%) number of borrowers had access to river drinking water, while after joining BRAC the percentage of using river drinking water increased to nil from 1.5 percent and 3(1.5%) number of borrowers had access to well drinking water. While after joining BRAC the percentage of using well drinking water decreased to .5 percent from 1.5 percent. From the same table it was found that, joining BRAC, some people who drank water from pond, river and well because of having few knowledge of the will happening of drinking the water from those sources. But after joining the BRAC, the borrowers awareness, knowledge increased and capacity to buy a tube- well increased. 5.1.17 Impact on sanitation Sanitary latrine is essential for good health. Toilet facilities of BRAC borrowers are given below. Table-5.1.17 Toilet facilities of BRAC borrowers Type of Latrine Before Joining After Joining BRAC BRAC No. of Percent No. of Percent (%) respondent (%) respondent 180 90 190 95 20 10 10 5 200 100 200 100 Nature of Change (%)

Sanitary Other Total

+5 -5

Source: Field Survey, 2009

80

200 180 160 140 120 100 80 60 40 20 0

180

190

200 200

B efore Joining B RA C No. of respondent 90 95 100 100 B efore Joining B RA C P ercent (% ) A fter Joining B RA C No. of respondent 20 S anitary A fter Joining B RA C P ercent (% ) Total

1010 5

Other

Figure5.1.17: Toilet facilities The table and graph 5.1.17 shows that, 180(90%) number of borrowers had hygienic sanitary latrines before joining BRAC. While the percentage of using sanitary latrines increased to 95 percent after joining BRAC 20(10 %) number of borrowers did not have sanitary latrine before joining BRAC. While the figure reduced to only 10(5%) borrowers after joining BRAC. From the above table it was found that, after joining the BRAC ,the borrowers used more sanitary latrine than before because their knowledge ,awareness increased due to participation of different meetings and discussion sessions. 5.1.18 Sources of power of BRAC borrowers

81

Without electricity civilization of modern era is impossible. Electricity is essential for growth and development of any country. Recently Bangladesh is facing scarcity of electricity. It is a serious problem of Bangladesh. However, sources of power of BRAC borrowers are given below:

Table-5.1.18 Electricity connection of BRAC borrowers Type connection Electricity connection Without Electricity connection Total Before Joining BRAC No. of Percent respondent (%) 120 60 80 40 After Joining BRAC No. of Percent respondent (%) 160 80 40 20 Nature of Change (%) +20 -20

200

100

200

100

Source: Field Survey, 2009

250 200 150 100 50 0 No. of Percent (% ) No. of Percent (% ) respondent respondent Before Joining BRAC After Joining BRAC 120 80 60 200 160 100 40 40 100 200 Electricity connection W ithout Electricity connection Total 20

80

Figure 5.1.18: Impact on power

82

Table 5.1.18 shows that, before joining BRAC 120(60%) borrowers had electricity connection .After joining BRAC 80% respondents took electricity connection because the borrowers invested the credit in business or other productive activities which increased the income of respondents, and made them able to take connection of electricity. As they are economically solvent they will be able to pay the electricity bill of each month.

5.1.19 Impact on health The development of health is an important factor in the overall development of the country. But people of Bangladesh are very poor. They are not able to attend qualified physicians. However, attendance to qualified physician of BRAC borrowers is given below: Table-5.1.19 Attendance to qualified physicians of BRAC borrowers Status Before joining After joining BRAC Nature of BRAC change (%) No. of Percent No. of Percent respondent (%) respondent (%) Yes 50 25 150 75 +15 Sometimes 130 65 49 24.5 -13.5 No 20 10 1 .5 -9.5 Total 200 100 200 100 Source: Field Survey, 2009

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

20

10

1 49

0.5 24.5 No S om etim es

130

65 150 75

Y es

50

25

No. of P ercent (% ) No. of P erc ent (% ) res pondent res pondent B efore Joining B RA C83 A fter Joining B RA C

Figure 5.1.19: Going to qualified physicians The table 5.1.19 shows that, 50(25%) numbers of borrowers went to qualified doctors before joining BRAC. But after joining BRAC the percentage has been increased to 75 from 25 percentages. 130(65%) number of borrowers went sometimes to qualified doctors before joining BRAC. While after joining BRAC the percentage reduced to 24.5 from 65 percent and 20(10%) borrowers did not go 20(10%) number of borrowers but after joining BRAC the percentage reduced only 1 ( .5%) number of borrowers did not go to qualified physicians. From the findings after joining BRAC the percentage of going to qualified physicians has been increased. Because the borrowers have invested the credit properly which increased the income of respondents, made able to attend qualified doctor .As they are economically solvent they will be able to pay the fee of qualified (M.B.B.S) doctors .The other reason was that due to the participation in different meetings, discussion sessions, their awareness and knowledge has increased. So the number of borrowers visiting the qualified physicians has increased. 5.1.20 Opinion about the socio-economic conditions of BRAC borrowers Socio-economic development is the supreme target of the micro-credit objective of micro-credit is to develop the socio-economic conditions of its borrowers. Table-5.1.20 Socio-economic profile of the respondents Socio-economic conditions Improved Unchanged Deteriorated Total Source: Field Survey, 2009 No. of respondent 195 5 200 Percent (%) 97.5 2.5 100

84

Percent (%)

Improved 100 97.5 Unchanged Total

2.5

Figure 5.1.20: Opinion about the socio-economic conditions of respondents Out of 200 respondents 195(97.5%) improved their socio economic condition by taking credit from BRAC. Because they used the credit properly in business sector and got high profit. So improving the socio-economic status of the borrowers through the provision of credit for income and employment generating activities is the motto. But 5(2.5%) borrowers were not able to change their socio-economic conditions by taking credit from BRAC due to misuse of credit. 5.1.21 Opinion of improvement of monthly income of BRAC borrowers The major objective of micro-credit is to create income among poor households and thereby alleviate poverty. However, opinions of improvement of monthly income of borrowers are given below:

85

Table-5.1.21 Impact on income Income change Increased Very little increased Not increased Decreased Total Source: Field Survey, 2009 No. of respondent 139 60 1 200 Percent (%) 69.5 30 .5 100

Percent (%)

69.5 100

Increased Very little increased Not increased Total

0.5

30

Figure 5.1.21: Opinion of respondent about improvement of monthly income The table 5.1.21 shows that, 139 (69.5%) respondents invested properly, made proper planning to run the business, monitored the business regularly, tried to find out problems of business and solved the problems accordingly. As a result their business ran successfully, they got high profit from their business and their income increased highly. On the other hand some respondents 61(30.5%) did not make proper planning to run the business and did not monitor the business regularly so there were no profit from their business but loss occurred in their business. As a result the income of some respondents has decreased.

86

5.1.22 Distribution the principal amount used for paying installment The Principal amount is actual credit which borrowers take from BRAC. Table 5.1.22 presents distribution of the principal amount used for paying installment. Distribution of the principle amount used for paying installment is given bellow: Table 5.1.22: Distribution the principal amount used for paying installment Paying installment Yes, I pay No, I dont pay Total Source: Field Survey, 2009
250 200 150 100 77 50 0 Yes, I pay No, I dont pay No. of Respondent Total 46 23 154 100 200

No. of respondent 46 154 200

Percentage (%) 23 77 100

Percentage (%)

Figure 5.1.22: Distribution the principal amount used for paying installment In the table and graph 5.1.22 shows that, 46(23%) respondents paid principal amount of installment and 154(77%) respondents not paid principal amount of installment. It was found that the female respondents took credit from BRAC and gave to their husbands. They wanted to invest the money in the business sector but unfortunately some husbands spent the money in family purposes. As they didnt invest money in

87

business so there was no profit, and they were unable to pay the installments. In some cases, some husbands spent money in misuse and gambling etc. As a result some respondents pay installments from principal amount.

5.1.23 Impact on solvency Loan is needed to acquire solvency. Distribution changes of solvency are given below: Table 5.1.23: Changes of Solvency Solvency No. of respondent Percentage (%) Yes, I am 171 85.5 No, I am not 15 7.5 Others 14 7 Total 200 100 Source: Field Survey, 2009
1000 200 100 No. of Respondent 10 15 7.5 14 7 Percentage (%)

100

171 85.5

1 Yes, I am No, I am not Others Total

Figure 5.1.23: Level of solvency Out of 200 respondents, 171(85.5%) became solvent economically because they used the credit properly. But 29(14.5%) respondent did not use the money properly. So they did not become solvent economically.

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5.2 Ways of making micro-credit program more effective Effective of BRACs micro-credit is need more loan amount, effective training for borrowers and savings etc. Information about micro-credit of BRAC borrowers such as amount of credit, number of times of taking loan, purpose for taking the credit, payment of installment is given below: 5.2.1 Amount of credit taken by borrowers from BRAC The table 5.2.1 shows the amount of credit taken by the borrowers from BRAC. The amount of credit taken by borrowers is divided into four categories .Such as: Credit taken 1,000-5,000 6,000-10,000 11,000-16,000 17,000-Above Total Table 5.2.1: Invest taken by BRAC borrowers No. of respondent Percent (%) 100 50 78 39 19 9.5 3 1.5 200 100

Source: Field Survey, 2009

Percent (%) 120 100 80 60 40 20 0 10005000 50 39 9.5 1.5 Total 100 Percent (%)

6000- 11000- 1700010000 16000 Above

Figure5.2.1: Credit taken by BRAC respondent members

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Above the table and graphs 5.2.1 shows that, 100(50%) persons of credit borrowers were using credit amount of Tk. 1,000-5,000 and 78(39%) respondents invested Tk. 6000-10000 and 19(9.5%) borrowers took credit amount of Tk. 11,000-16,000 and only 3(1.5%) beneficiaries got credit of Tk. 17,000-above. From the same table it was found that, the amount of taking money varies from respondents to respondent according to need. 5.2.2 Distribution of installment Paying installment is a very important factor in credit system. There are different categories of paying installment. Such as: Table 5.2.2: Payment of installment of respondents Source No. of respondent Percentage (%) Own income 70 35 Good business 67 33.5 Proper usage of the credit 56 28 others 7 3.5 Total 200 100 Source: Field Survey, 2009
Percentage (%)

35

Own income Good business

100

33.5

Proper usage of the credit others

3.5

28

Total

Figure 5.2.2: Payment of installment

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Table and graph

5.2.2 shows that, 70(35%) borrowers paid weekly installment

through own income, 67(33.5 %) borrowers paid weekly installment by good business, 56(28%) borrowers paid weekly installment through proper usage of the credit and 7(3.5%) borrowers paid weekly installment through others source. From the same table it was seen that the weekly installments of the respondents vary from 100 to 400 or above. Some respondent took more money, their amount of weekly installment is more and the respondents who took less money their amount of weekly installment are less. 5.2.3. Distribution of the amount of weekly installment Installment of the amount is very important for the credit system. Table 5.2.3 presents the distribution of the amount of weekly installment at the time of survey. However distribution of the amount of weekly installment is given below: Table 5.2.3: Level of the amount of weekly installment Weekly Installment No. of respondent Percentage (%) 1-100 16 8 101- 200 36 18 201- 300 67 33.5 301- 400 35 17.5 Above 400 46 23 Total 200 100 Source: Field Survey, 2009
100 90 80 70 60 50 40 30 20 10 0 8 Percentage (%)
91

100

1-100 101- 200 201- 300 33.5 18 17.5 23 301- 400 Above 400 Total

Figure 5.2.3: Amount of weekly installment Table 5.2.3 presents the distribution of the amount of weekly installment at the time of survey. The table shows that, weekly installment of 116(8%) respondents is Tk.1100, of 36(18 %) respondents is Tk.101-200, percent i.e. of 67(33.5%) respondents is Tk. 201-300, 35(17.5%) respondents is Tk. 301-400 and of 46(23%) respondents is Tk. above 400. From the same table, it was shown that, installment of credit depends on credit amount. Borrowers who have more credit had to pay more installment. But borrowers who have less credit had to pay less installment. 5.2.4 Distribution of monthly deposit of BRAC borrowers Micro credit savings is a very important part. Distribution of monthly deposit of BRAC borrowers is given below: Table-5.2.4 Distribution of monthly deposit of BRAC borrowers Monthly Deposit Tk. 1-100 No. of respondent 75
92

Percent (%) 37.5

Tk. 101-500 Tk. 501-1000 1000- Above Total Source: Field Survey, 2009

109 15 1 200

54.5 7.5 0.5 100

200 180 160 140 120 100 80 60 40 20 0 15 1 75 109

200

Tk. 1-100 100 54.5 37.5 7.5 0.5 Tk. 101-500 Tk. 501-1000 1000- Above Total

No. of respondent

Percent (% )

Figure 5.2.4: Distribution of monthly deposit The table and graph shows that, 75(37.5%) borrowers deposited Tk. 1 to 100 and 109(54.5 %) borrowers deposit Tk. 101 to 500 and 15(7.5%) borrowers Tk. 501 to 1000 deposit Tk. 501 to 1000 and only 10(5%) borrowers deposit above Tk.1000. From the above table it was found that before receiving credit from BRAC they were not introduced to deposition of money month wise .They introduced by the BRAC personnel that they had to deposit some money in each month. As their income increased, awareness about deposit of money, each respondent began to deposit money every month. So BRAC has a positive impact on saving of borrowers. 5.2.5 Opinion about the credit of BRAC borrowers The opinion about the credit of BRAC borrowers are three categories. These are sufficient, insufficient and very negligible. However the opinion about the credit of BRAC borrowers is given below:

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Table-5.2.5 Opinion about the credit Opinion about the credit Sufficient Insufficient Very Negligible Total Source: Field Survey, 2009
120 100 80 60 40 22.5 20 2.5 0 Percent (%) 75 100

No. of respondents 150 45 5 200

Percent (%) 75 22.5 2.5 100

Sufficient Insufficient Very Negligible Total

Figure 5.2.5: Opinion about the loan Out of 200 respondents 150(75%) respondent told that the credit was sufficient because they had no money to invest they thought 5,000 taka is enough to invest in village level to earn some money .But 45(22.5%) respondents told that the amount of money is insufficient. Because they want to invest money in big business .So they said amount of credit of BRAC is insufficient.

5.2.6 Training of BRAC borrowers

Training is a social, continuous process of giving knowledge, increasing skills and efficiency and accommodating the employee in the organization for the performance achievement of the organizational goal. (Rahman, 2006)

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Training is important for borrower to use credit properly. The objective of training is to develop skill which will raise the productivity of the trainee. However, training of BRAC borrowers is given below: Table 5.2.6: Opinion about of training Training Yes, I have No, I dont have Total Source: Field Survey, 2009 No. of respondents 81 119 200 Percentage (%) 40.5 59.5 100

Total No, I dont have Yes, I have 0

81

200

100

119

64.5

40.5

50

100

150

200

250

300

Figure 5.2.6: Level of training Out of 200 respondents, 81(40.5%) borrowers took part in the training and completed successfully. But 119(64.5%) respondents did not participate the training due to communication gap, irresponsibility of borrowers, fear of installment payment etc. 5.3 Table showing the socio-economic condition of BRAC borrowers before and after joining:
Status 1.Attending qualified doctor Yes Sometimes No Percentage before joining BRAC (%) 25 65 10 Percentage after joining BRAC (%) 75 24.5 0.5 Nature of Change (%) +50 -40.50 -9.5 Comments

Increased

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2. Use of electricity

Electricity connection Without electricity connection Tube well Pond River Well Nil Up to 10 11 to 25 26 to 50 51 to above Up to Tk. 5000 Tk. 600010000 Tk. 1000115000 Tk. 15000above Tk 0-5000 Tk 600010000 Tk 1100015000 Tk 1600020000 Tk 2100025000 Tk 26000above Bamboo Made Soil Made Tin Shade Building Sanitary Others More than Sufficient Insufficient very negligible Improved Unchanged Deteriorated

60 40 93.5 3.5 1.5 1.5 8 35.5 15 20 22.5 75 22.5 1.5 1 71 27.5 1.5 18 13.5 60 8.5 90 10

80 20 97.5 2 .5 7.5 37.5 17.5 30 7.5 30 60 4 6 48.5 42.5 7.5 .5 1 9.5 10.5 57.5 22.5 95 5 5 74.5 22.5 2.5 97.5 2.5 -

+20 -20 +4 +1.5 -1.5 -1 -.5 +2 +2.5 +10 -15 -4.5 +37.5 Increased +2.5 +5 -22.5 +15 +7.5 -1 +1 -8.5 -3 -2.5 +14 +5 -5 Increased Increased Increased

3. Use of tube wells

Increased

4. Land ownership pattern

Improvement

5. Income level

6. Level of Monthly expenditure

7. Level of status in housing building

8. Use of Sanitary latrine 9. Opinion about the credit

Increased Sufficient

10. Opinion about the socio-economic condition

Improved

Source: Field Survey, 2009 From the above table, it is shown that, socio-economic conditions of borrowers by BRAC credit increased.

Chapter-Six

96

Model Development

97

Chapter Contents
6.1 Definition of Model 6.2 Objectives of Model 6.3 Types of Model 6.4 Model Development Process 6.5 The Family Based Credit Program: A Proposed Model

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Chapter-Six Model Development

6.1 Definition of Model
Model is a realistic description of a theoretical framework of a thought and the micro -credit model is similarly a symbolic representation of the micro credit process. 1. Model is Graphical, mathematical (symbolic), physical, or verbal representation or simplified version of a concept ,phenomenon, relationship, structure, system, or an aspect of the real world.(Source: www.businessdictionary.com) 2. Model is an abstraction of reality, generally referring in investments to a mathematical formula designed to determine security values. Economists also use models to project trends in economic variables such as interest rates, economic activity, and inflation rates (Source: Financial dictionary) 3. A model is the description of observed or predicted behavior of some system, simplified by ignoring certain details. Models allow complex systems, both existent and merely specified to be understood and their behavior predicted. A model may give incorrect descriptions and predictions for situations outside the realm of its intended use. A model may be used as the basis for stimulation. (Source: Computing Dictionary) 4. Model is a systematic description of an object or phenomenon that shares important characteristics with the object or phenomenon. Scientific models can be material, visual, mathematical or computational and are often used in the construction of scientific theories.(Source: Science Dictionary) 5. Model is a representation of a system that allows for investigation of the properties of the system and in some cases, prediction of future outcomes. Models are often used in quantitative analysis and technical analysis, and sometimes also used in fundamental analysis.(Source: investwords.com) In conclusion, when micro- credit process is represented through any figure or visual method is called micro credit model.
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6.2 Objectives of a Model

The objectives of a model include (1) to facilitate understanding by eliminating unnecessary components (2) to aid in decision making by stimulating 'what if' scenarios (3) to explain, control and predict events on the basis of past observations. Since most objects and phenomenon are very complicated (have numerous parts) and much too complex (parts have dense interconnections) to be comprehended in their entirety, a model contains only those features that are of primary importance to the model maker's purpose. Models range from simple sketches to computer programs with millions of lines of code but all of them have one thing in common some elements of the actual 'thing' are abstracted or mapped into the model (Source: www .businessdictionary.com)

6.3 Types of Model

Model is divided into three classes on the basis of their degree of abstraction. (1) Iconic model: Iconic model is least abstract, physical, 'look-alike' model, such as a model airplane or train. (2) Analogous model: Analogous model is more abstract but having some resemblance to what it represents, such as a chart, graph, map, network diagram. (3) Symbolic model: Symbolic model is most-abstract model with no resemblance but only an approximation to what it represents, such as a mathematical equation or formula, financial statement, language and set of accounts. (Source: www.businessdictionary)

6.4 Model Development Process

A six step model development process, followed by AERMIC, resulted in the promulgation of a regulatory replacement for the ISC model, AERMOD. process followed is as follows: 1) Initial model formulation; 2) Developmental evaluation; 3) Internal peer review and beta testing; 4) Revised model formulation; 5) Performance evaluation and sensitivity testing; 6) External peer review.
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The

6.5 Proposed Model for Micro-credit Program of BRAC: Family Based Credit Model Bangladesh is a developing country having 16 corer people. Among the population, maximum lives in the rural area which is poverty prone area than urban area. To eradicate poverty micro credit is being provided and it has been given for last 30 years in the rural area of Bangladesh by various NGOs and micro credit institutions. But poverty could not be removed. Because, the credit has given to a group, it is not the family. If family size credit program is introduced, it is hoped that poverty can be eliminated from the society of Bangladesh. Definition of Family Based Credit Model Family Based Credit Model is to increase income, to alleviate poverty creating employment opportunity following effective training and giving work oriented products among the family members. Objectives of Family Based Credit Model 1. To make each member of a family independent. 2. To increase income of a family. 3. To create dignity of livelihood.
4. To increase revenue for the nation. 5. To make the country independent.

Characteristics of Family Based Credit Model: 1. Mission: Its mission is to help (low and medium households) themselves to overcome poverty and increase earnings. 2. Product Credit: No money, Work. Nobody will be provided with cash money. A member is permitted a purchase those commodities such as sewing machine, van, cow etc, he wants to get. 3. Group: A family is a group. 4. Size: Loans are medium in size .Minimum amount taka 50,000 for a family. 5. Target users: Low and medium households. 6. Utilization: The use of funds for income generation and enterprise development.

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7. Duration: Its duration is 2 years or 100 weeks. 8. Interest: Interest is given by simple interest method. 9. Training: A person must receive training who are interested to increase earnings of the family. 10. Installment: They must repay the installment per week. Component of Family Based Credit Model: There are six components of products credit model as follows: 1. Selection of borrowers Firstly the borrowers will be selected. In that case the priority will be given in their educational qualification, age and economic condition. Criteria for selecting borrowers are as follows:
(i) (ii)

Economic condition will be medium and lower level. Credit will be given to both educated and illiterate people.

2. Savings Then the borrowers will be encouraged in savings. In this stage they have to save 10 taka per week which is refundable. 3. Training The third step of the model is training to the credit holders, who do not have the knowledge, experience and efficiency in proper use of the credit. The proper use of the credit is possible through training. For this, the credit holder must be given the training of proper use of money besides the training of tailoring, rearing cows, handicraft etc. 4. Allocation of Family Based Credit Model Nobody will be provided with cash. Credit will create a significant productive base. So a credit holder such as sewing machine van, rickshaw, cow and any income base products, borrowers want to get. In some cases cash will be provided. The product loan will be distributed among only the trained holders. 5. Evaluating and Monitoring Proper evaluating and monitoring is to be ensured so that the borrowers can properly use the credit. The next step of the model is evaluating and monitoring to the credit

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holders. If the credit holders dont use the money properly, they will be helped perfectly by supervising. 6. Recovery of the credit In this stage the installment will be taken after three month of distributing money. Those who are failure to pay the installment must be taken under law on legal process. Those who use the money effectively will be given more new products. 7. Out comes It is hoped that to implement the model successfully, if the credit holders can increase their self employment, socioeconomic development, increasing revenue then so country will economically independent. These are the main components of Family Based Credit Model.

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104

Structure of Family Based Credit Model Generally father /husband are main income earner of family in Bangladesh. Every member will be income earner through it. Family Based Credit Model is presented below:
Family Member' Father Mother Elder son Younger son Elder Daughter Younger Daughter Total Taka 6000 50000 7000 13000 Service/Business/Agricult ure ; Housewife Student/Job less Student Student/Job less Student Milk able cow cultivation Poultry/Dairy 20000 10000 3000 500 1500 1000 500 3000 500 1500 1000 500 Main Job Present Income 6000 Product Credit Fruit garden Credit Amount 5000 Probable monthly income 500 Total Income 6500

firm Handicrafts/Van 5000 Sewing Machine 5000 Goat cultivation 5000

Table 6.5: Concept of Family Based Credit Model The main aim of this project is to provide extra income source besides its members main job which help to increase earnings. Indeed each member of a family will be independent. Methods of payment of credit In order to implement the family base credit project every family needs maximum 50,000 taka in a medium size. This credit will be given at the rate of 10% interest as a service charge per two years. It will be repaid every week as an installment. Such as income generating activities of tk. 50.000 of a family 10% service charge in taka 5000 i.e. gross collection taka is 55,000 two years period (100 week) i.e. weekly installment is 55,000/100 = 550 and in every month 550 x4 = 2200 tk. Monthly disposable earnings is tk. 7000. It's a result first two years income is tk. 7000-1200 = 5800 tk. After two years the credit will be repaid and for the augmentation of each income generating activities factor income will be free from poverty.

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If the abovementioned proposed Family

Based Credit Model is implemented,

poverty is expected to be reduced in the families through out the country if other conditions favor .In this way Bangladesh can have herself employed and independent families.

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Chapter-Seven

Conclusions and Recommendations

107

Chapter Contents
7.1 Conclusions 7.2 Recommendations

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Chapter-Seven Conclusions and Recommendations

7.1 Conclusions
Bangladesh Rural Advancement Committee (BRAC) is the largest and most successful NGO in the world. BRAC is working in health, education, and livestock, fisheries, agriculture and microfinance program. BRAC microfinance program has been working for the disadvantage rural population specially women. Objective of BRAC microfinance is to improve the economic and social status of the rural poor by extending credit facilities to undertake profitable income and employment generating activities. Products and services of BRAC microfinance are micro loan, micro enterprise loans, and remittance delivery service. Components of the BRACs microfinance program are (a) DABI (b) PROGOTI (c) Unnoti. Poverty alleviation is the supreme target of the BRAC micro credit program. BRAC touch the fundamental elements of socio-economic development. Participation in microcredit program has a beneficial effect on household welfare by increasing womens income contribution to household .The socio-economic condition of the BRAC borrowers are increasing .BRAC borrowers are making house and sanitary latrine, sinking tubewell. The researcher shows that, the economic conditions, health & sanitation, uses of electricity & drinking water etc have been improved after taking credit from BRAC. However, it can be said that, BRAC's micro-credit program has a positive role on socio-economic development of Bangladesh.

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7.2 Recommendations
The findings of the study can be used to put forward some suggestions regarding the credit operations of the BRAC towards the welfare of the respondents and therefore the provision of credit can be viewed as an instrument for income generating. According to the findings and the analysis the researcher recommends the following suggestions:

Amount of the loan: The first loan should be increased at least tk.

50, 000.Since the amount of loan is too small to proceed towards self-reliance of borrowers. So to reduce their dependence on credit, the amount of loan should be increased.

Productive base: Credit should create a significant productive base. Interest rate: The interest rates are high for rural credit than commercial bank loan. Despite poverty the poor borrowers are earning considerable family income to improve their socio-economic condition. Therefore interest rate should be reduced.

Quality training: Borrowers should be provided with quality training for proper utilization of borrowed money. Proper supervision: Proper supervision is to be ensured so that the borrowers can not misuse the money. Cottage industries: Cottage industries should be encouraged for women so that women borrowers can use the investment by themselves. Payment of installment: Payment of installment should start at least after three month of takings the first installment of loan disbursed. Loan funds: BRAC should increase its loan able funds and motivate the borrowers to increase their savings. This would reduce the high interest paid to external sources.

If above mentioned recommendations are accepted, it can be hoped that the socioeconomic conditions of BRAC borrowers will improve.

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Annexure

111

Annexure-01 References
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Arefin, Shanaz (1996), Role of NGO's in Development a Study of Poverty Alleviation Programs in Bangladesh, M.Phil Dissertation, Department of Public Administration, Dhaka University, Dhaka BRAC Annual Report, (2007), BRAC, Dhaka. BRAC Annual Report (2008), BRAC, Dhaka. BRAC Annual Report (2010), BRAC, Dhaka. BRAC Bullitein: Social Enterprise & Invest (2007), BRAC, Dhaka. BRAC Microfinance Programme, (2008), BRAC, Dhaka. BRAC RCP Project Records (2009). Credit Infusion in an Integrated Development Strategy: The BRAC Approach, Principles, Process and Mechanisms (1987), BRAC, Dhaka. Computing Dictionary. Financial Dictionary Gupta & Gupta (2010), Business Statistics, Sultan Chand and Sons, New Delhi. Islam, M. Nurul (2008), In Introduction to Research Methods, Mullik & Brothers,Dhaka. . Investorwords.com

15. 16.

Khan, M. Abdul Wadud (1998), The Role of NGO'S in Rural Development: A Case Study on BRAC's Rural Development Program, Department of Social Science, Dhaka University. Lovell,Catherin H.(1992), "Breaking the Cycle of Poverty: The BRAC Strategy,University Press limited , Dhaka. Mobarak Salma (2009), Micro-credit: A strategy for Empowering Women in Bangladesh, M. Phil dissertation, Department of Public Administration, Dhaka University.
Official Records, BRAC, Head Office, Dhaka. Rahman, M Ataur (2006), Human Resource Management, Zahin Publications, Dhaka. Saifullah, A.K.M (1999), Changing Dimension of NGO Activities in Bangladesh:A Study of BRAC, M.Phil Dissertation, Department of Public Administration, Dhaka University, Dhaka. Science Dictionary Wording.com www.wikipedia.org www.businessedictionary.com

17. 18. 19. 20. 21. 22. 23.

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Annexure-02

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Annxure-03

Codes of conduct of Members of BRAC Micro Credit Programs

BRACs 17 promises for the credit group
1. We will not engage in malpractice or injustice. 2. We will work hard and bring prosperity for our family. 3. We will send our children to school. 4. We will adopt family planning and keep our family size small. 5. We will try to be clean and keep our house tidy. 6. We will always drink pure water. 7. We will not keep our food uncovered and will wash our hands before we take our meal. 8. We will construct our latrines and will not leave our stool where it doesnt belong. 9. We will cultivate vegetables and trees in and around our house. 10. We will try to help each other under all circumstances. 11. We will fight against polygamy and injustices to our wives and all women. 12. We will be loyal to the organization and abide by the rules and regulations. 13. We will not sign anything without having a good understanding of what it means (we will look carefully before we act). 14. We will attend weekly meetings regularly and on time. 15. We will always abide by the decisions of the weekly group meetings. 16. We will regularly deposit our weekly savings. 17. If we receive loan we will repay it. Source: Khandker, 1999, P.27

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Annexure-04 Features of BRAC Credit Program

Features Membership criteria Maximum landing holding of .5 acre of land. At least one household member must work for wages (since 1992 one member allowed per household). 30-40 members from village organizations. Village organizations are divided into solidarity groups of 5-7 members. Separate groups for men and women. Each women group has a counterpart men group. Weekly meetings of solidarity groups. Tk. 2 per week. 4 percent of each loan (nonrefundable) goes to group fund. 1 percent of each loan used for group insurance. No collateral but group liability. 50 week installment of loan. Interest at the end of loan cycle. 20 percent interest for production loans. Maximum loan Tk. 1000. Training duration 3-6 months. Review of code of conduct at village organization meetings. Substantial skill-based training.

Group features

Savings mobilization

Credit delivery mechanism

Social development

Source: Khandaker, 1999, p. 24

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Annuex-05: Some pictures of BRAC borrowers families Picture-1

(Source: BRAC Annual Report, 2007)

116

Picture -2

(Source: BRAC Annual Report, 2007) Picture -3

(Source: BRAC Annual Report, 2007)

117

Picture -4

(Source: BRAC Annual Report, 2007)

118

Picture -5

(Source: BRAC Annual Report, 2007)

119

Picture -6

(Source: BRAC Annual Report, 2007)

120

Picture -7

(Source: BRAC Annual Report, 2007)

121

Picture-8

Monjura Begum and her family live in their new home rebuilt by members of the Village Poverty Alleviation Committee. Picture-9

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Annexure-6 Questionnaire
A survey on

The Role of Micro-credit in Socio-economic Development of Bangladesh: A Case Study on BRAC

[As a part of M.Phil program]

For Md.Kamruzzaman M.Phil Researcher Registration no 507078 Management Discipline

Faculty of Business Studies Group National University Gazipur 2009

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The Role of Micro-credit in Socio-Economic Development of Bangladesh: A Case Study on BRAC

Questionnaire
(A) Impact of Micro-credit program of BRAC borrowers
1. What is your name? 2. What is your permanent address? C/O: P.S: Village: District:

3. What is your educational qualification? Illetrature VI-SSC Can sign only HSC-Above I-V

4. What is your occupation? House making Cottage industry 5.How old are you? 15-24 25-34 Farmer Day labourer Other 45-54 Above 55

Business 35-44

6. What is your sex? Male Female 7. What is your number of family members? Male Person Female ..Person

8. What is your number of earning members in the family? (I) at the time of joining BRAC: 1 Person 2 Persons 3 Persons 4 persons above 4 persons

9. How many children do you have in the family? No children 1-3 4-6 above 6

10. How many times you have received the loan from BRAC? 1-4 5-9 10-14 124

11. What is your purpose of the loan? Familial purpose for business for paying loan For purchase rickshaw, Sewing machine Familial expenditure For building construction for firming poultry others

12. What is the period of receiving the loan? 1 year 2 years 3 years 4 years above 5 years

13. Why paying weekly installment is not a problem? , becauseOwn income Good business Proper usage of the credit others

14. Is any number in the family received loans from BRAC? Yes, No, thinking of taking others

15. How many NGO you already have taken the loan from? One Two Three above -three

16. Own land (Including home stead land) (a) At the time of joining BRAC . Decimals (b) At present (2009)Decimals 17. Cultivate land (a) At the time of joining BRAC .Decimals (b) At present (2009) .Decimals 18. Value of Asset (a) At the time of joining BRAC .Taka (b) At present ..Taka 19. If yes, which is the organization? Bank Others NGO Mohajon Relatives & Friend Neighbors

20. What was your monthly income before starting receiving the loan?? (Per month) 0-5,000 taka 1,001-15,000 5,001-10000 taka 15,001-Above

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21. After starting receiving the loan what is your monthly income at present? 0-5,000 taka 5,001-10,000 taka 15,001-Above

10,001-15,000 taka

22. What are the modes of spending the loan? Business Purchase cattle Purchase Rickshaw, Sewing machine

Vegetable Garden and plantation tree 23. Is the proper usage of loan being confirmed? Yes No

24. What is the reason behind for the incapacities for not improper usage? No earning person poverty in the family Others 25. How much money do you save per month? Tk.1-100 Tk.101-500 Tk.501-1,000 the loan is purposed the for itself

Tk.1, 000-above

26. What is the expenditure of your family Tk.0-5,000 Tk.5, 001-10,000 Tk.10, 001-15,000 Tk.15, 001-20,000

Tk.20, 001-25,000

Tk.25, 001-Above

27. What is the condition of your house at the time of joining BRAC? Soil made Bamboo made Tin shed Building Others

28. What is the present condition of your house? Soil Made Bamboo Made Tin shed Building Others

29. How many school going children you had at the time of joining BRAC? Could go to school . person Went to school . Person 30. What is the number at present? Can go to school . person Goes to school .. Person

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31. What are the reasons behind the lacking? Financial awareness others

32. Do you use any sanitary latrine in your house? Yes No, I will plan

33. If, not why? Financial Lack of awareness other

34. What was the source of your drinking water at the time of joining BRAC? Tube-well Pond River Well

35. What is the source of your drinking water at present? Tube-well Pond River Well

36. What are the reasons for not drinking tube-well water? Lack dont have enough money to buy one Dont have one nearby others

37. Do you see specialized Doctors? Yes No Sometime

38. Do you have power supply in home? Before joining BRAC At present: Electricity connection without electricity connection

Electricity connection

without electricity connection

39. What is your opinion about the socio-economic conditions? Improved Unchanged Deteriorated

(B) Ways of Making Micro-credit program effective

40. How much money do you owe to BRAC? 1000-5000 6000-10000 11000-16000 17000-Above

41. What is your opinion about the amount of the loan? Amount is adequate Amount is not adequate 127 Very Nominal others

42. What is the amount of weekly installments? 1-100 taka 101-200 taka 201-300 taka 301-400 taka above 400 taka

43. Is the principal amount used for paying the installment?? Yes, I pay No, I dont pay

44. Do you have any training on receiving loan loan? Yes, I have No, I dont have

45. Do you deposit money? I do No, I dont I try, but can not I will in future others

THANK YOU

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